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EVENUE  COMMISSIONER  WELLS 


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AXATION,  WAGES,  HIGH  PRICES, 


Monopolies,  Duties  &  Special  Legislation. 


to  J)ork: 

WING  POST  STEAM  PRESSES,  41  NASSAU  ST.,  Cor.  LIBERTY. 


1869. 


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\Ay\ 


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* 

( 

i 


Revenue  Commissioner  Wells’s  Report,  for  the  year  1868,  which  is  here¬ 
with  presented  to  the  readers  of  the  Evening  Post  in  a  form  convenient 
for  reading,  and  for  preservation,  is  a  document  which  men  of  all  parties 
and  opinions  have  acknowledged  to  be  of  very  great  value  and  importance. 
It  has  attracted  attention  in  Europe  as  well  as  here,  and  the  facts  and 
figures  which  Mr.  Wells  has  brought  together  have  become  the  foundation 
for  earnest  discussions  all  over  this  country. 

Mr.  Wells  is  not  a  free  trader  ;  he  has  always  been  a  protectionist 
But  he  is  a  man  of  sense  ;  a  man  accustomed  to  scientific  investigations ; 
and  a  lover  of  fair  play.  He  has  not  endeavored  to  make  his  statistics 
conform  to  any  theory  ;  but  in  this  report,  has  suffered  facts  to  speak  for 
themselves. 

He  shows,  1st.  That  the  present  enormously  high  tariff  duties,  while 
they  enrich  a  few  capitalists,  injure  most  of  the  industries  of  the  country. 

2d.  That  they  impoverish  the  people,  so  that  under  the  present  system, 
while  the  rich  grow  richer,  the  poor  become  poorer. 

3d.  That  the  high  duties  have  disabled  us,  in  many  products — chairs, 
for  instance — from  selling  in  foreign  markets,  whereby  it  happens — 

4th.  That  as  we  must  buy  some  things  abroad — as  for  instance,  hides 
in  South  America,  to  supply  our  shoemakers  with  leather — we  must  export 
gold  to  pay  for  them,  where  we  formerly,  under  moderate  duties,  exported 
the  products  of  American  industry. 

5th.  He  shows  that  the  high  tariff  has  produced  a  great  inflation  in 
prices  ;  and 

6th.  That  owing  to  this  fact,  American  working  men  and  women  are 
actually  paid  more  poorly  now  than  before  the  war  under  lower  tariffs. 
Elaborate  but  easily  understood  tables,  comparing  wages  with  prices, 
prove  this  beyond  dispute. 


jp 


'O 


4 


7th.  Finally,  he  shows,  that  the  monopolists  who  have  induced  Con¬ 
gress  to  adopt  a  high  tariff  have  been  unscrupulous  and  selfish  to  the  last 
degree,  and  have  not  cared  whom  or  what  they  ruined,  if  only  they  could 
carry  their  own  measures,  and  secure  monopolies  for  themselves. 

We  advise  those  who  receive  this  report,  to  study  it  attentively,  and  to 
discuss  its  facts  with  their  neighbors  and  friends.  The  country  is  now 
suffering  terribly ;  all  working  men  feel  that  “  something  is  wrong.” 
This  report  will  tell  them  what  is  wrong,  and  where  the  remedy  lies.  Re¬ 
form  of  taxation  must  come  from  the  people.  Let  every  man  make  up 
his  mind  to  influence  his  Representative  in  Congress  to  vote  for  a  reform 
of  the  tariff  system,  and  a  reasonable  scale  of  duties. 

Let  it  be  remembered  that  we  may  have  a  simple  system,  if  only  we  can 
overcome  the  monopolists,  who  call  themselves  “  protectionists.”  Great 
Britain  owes  as  much  as  we  do ;  she  has  a  smaller  population  ;  she  needs 
a  larger  revenue,  for  her  government  is  more  expensive  than  ours.  Yet 
nearly  the  whole  revenue  of  the  British  empire  from  customs  or  tariff  du¬ 
ties  is  derived  from  seven  articles ;  and  ninety-six  and  a  half  per  cent,  of  the 
revenue  from  excise  comes  from  spirits,  malt  and  licenses.  The  official 
figures  for  customs  in  Great  Britain  for  the  last  two  years  are  these : 


Sugar  and  molasses. . . 

Tea . 

Coffee . 

Corn,  meal  and  flour. . 

Spirits . 

Wine. . 

Tobacco  and  snuff. 

Other  imports . 

v  Sundries . 

Total  customs 


1867. 

1868. 

,  £5,647,787 

£5,582,473 

.  2,658,716 

2,827,317 

397,190 

390,161 

797,339 

869,323 

.  4,173,027 

4,298,403 

,  1,391,192 

1,468,993 

.  6,455,011 

6.542,250 

577,666 

581,481 

200,838 

104,580 

£22,290,066 

£22,664,981 

Yet  instead  of  seven  articles  we  lay  a  tariff  on  nearly  sixteen  hundred ! 

England  has  tried  both  plans  ;  first,  that  we  follow,  of  adjusting  uni¬ 
versal  taxes  so  as  to  protect  and  help  everything ;  and  secondly,  that  of 
selecting  a  few  articles  to  tax,  solely  for  revenue  purposes.  By  the  latter 
plan  she  now  collects  more  revenue,  more  cheaply,  and  with  incomparably 
less  pressure  on  the  people,  than  she  ever  did  by  the  former. 


Agitate,  agitate,  agitate,  for  fair  play,  and  no  monopoly. 


REPORT 


OF  TIIK 

SPECIAL  COMMISSIONER  OF  THE  REVENUE. 


Treasury  Department, 

Office  of  Special  Commissioner  of  the  Revenue, 
Washington ,  D.  C.,  January,  1869. 

Sir  : — I  propose  in  this  my  third  annual  re* 
port,  which  I  have  the  honor  herewith  to  pre¬ 
sent,  to  ask  through  you  the  attention  of  Con¬ 
gress  to  the  results  of  a  somewhat  extended  in¬ 
vestigation,  instituted  with  a  view  not  of  estab¬ 
lishing  or  confirming  any  particular  theory,  hut 
rather  of  determining,  through  the  collection  of 
positive  data,  what  policy  in  legislation  is  likely 
to  prove  hereafter  most  advantageous  to  the  rev¬ 
enue,  and  most  certain  to  establish  the  credit 
and  industry  of  the  whole  country  upon  a  sound 
and  substantial  basis. 

As  all  reasoning  in  respect  to  the  future  must 
necessarily  be  predicated  upon  the  experience  of 
the  past  or  present,  it  is  obvious  that  the  first 
step  or  starting  point  of  this  inquiry  is  involved 
in  the  determination  of  the  question  as  to  what  is 
THE  PRESENT  CONDITION  OF  THE  CAPITAL  AND  IN¬ 
DUSTRY  OF  THE  COUNTRY. 

The  facts  which  constitute  an  answer  to  this 
question  are  to  a  considerable  degree  contradic¬ 
tory  and  paradoxical.  On  the  one  hand  there  is 
much  that  indicates  that  the  country  is  rapidly 
recovering  from  the  effects  of  the  war,  and  re¬ 
suming  that  wonderful  career  of  progress  and 
development  which  especially  characterized  its 
history  during  the  period  embraced  in  the  thir¬ 
teen  years  from  1847  to  1860.  On  the  other 
hand  there  is  another  class  of  facts  which  as  un¬ 
mistakably  indicate  the  existence  of  agencies 
which  tend  to  arrest  or  obstruct  national  devel¬ 
opment,  and  which  foster  speculation,  idleness, 
extravagance  of  living,  discontent  with  moderate 
and  slow  gains,  haste  to,  be  rich,  and  the  spirit 
of  trading  as  distinguished  from  the  spirit  of  pro¬ 
duction. 

,  It  is  proposed,  in  the  first  instance,  to  briefly 
state  the  evidence  in  support  of  the  first  propo¬ 
sition  ;  and  although  this  evidence  has  been  pre¬ 
sented  in  great  part  already  by  the  Commissioner 
in  his  two  previous  reports,  yet  a  recapitulation 
«of  the  leading  elements  of  national  wealth,  on 
which  rest  the  elements  of  national  credit,  can 
never  be  considered  as  untimely  so  long  as  a 
distrust  of  the  resources  of  the  nation  is  for  any 
purpose  fostered  and  encouraged — particularly 
by  persons  holding  official  or  other  public  posi¬ 
tions.  This  evidence  may  be  grouped  as  follows : 

First:  Immigration. — From  the  1st  of  July, 
1865,  to  the  1st  of  December,  1868,  about 
1,000,000  natives  of  foreign  countries  have 
sought  a  permanent  home  in  the  United  States. 


Investigations  made  some  years  ago  (since  when 
the  character  of  the  immigration  has  greatly  im¬ 
proved),  showed  that  these  immigrants  bring 
with  them  specie  or  its  equivalent  to  the  average 
amount  of  eighty  dollars  per  head  ;  while  their 
average  value  to  the  country  as  producers  cannot 
be  estimated  at  less  than  half  the  average  value 
of  an  ordinary  laborer  in  the  south  prior  to  the 
war,  viz :  $1,000  each.  Immigration,  then,  since 
the  termination  of  the  war,  may  be  regarded  as 
having  added  $80,000,000  directly,  and  $500 
000,000  indirectly,  to  the  wealth  and  resources 
of  the  country. 

Secondly  :  A  General  Increase  in  the  Pro¬ 
ducts  of  Domestic  Industry. — The  Commissioner 
is  fully  aware  of  the  difficulties  attendant  upon 
the  determination  of  estimates  in  this  depart¬ 
ment;  prices,  with  the  present  irredeemable, 
fluctuating  currency  being  wholly  valueless  as  a 
measure ;  while  a  statement  of  quantities,  to  be 
strictly  accurate,  must  be  considered  not  only 
with  reference  to  quality,  but  also  to  the  normal 
increase  in  production,  which  under  all  circum¬ 
stances  accompanies  an  increase  of  population. 
Nevertheless,  the  wealth  of  the  country  is  its  ca¬ 
pacity  for  annual  production ;  and  an  analysis  of 
this  production  is  the  surest,  and  at  present  the 
only,  available  method  of  testing  that  wealth. 

Speaking  generally,  however,  in  the  first  in¬ 
stance,  the  Commissioner  asserts  that  all  the 
available  data  tend  to  establish  the  following 
conclusions,  viz :  That  within  the  last  five  years 
more  cotton  spindles  have  been  put  in  operation, 
more  iron  furnaces  erected,  more  iron  smelted, 
more  bars  rolled,  more  steel  made,  more  coal 
and  copper  mined,  more  lumber  sawed  and  hewrn, 
more  houses  and  shops  constructed,  more  manu¬ 
factories  of  different  kinds  started,  and  more  pe¬ 
troleum  collected,  refined,  and  exported,  than 
during  any  equal  period  in  the  history  of  the 
country  ;  and  that  this  increase  has  Teen  greater 
both  as  regards  quality  and  quantity,  and  greater 
than  the  legitimate  increase  to  be  expected  from 
the  normal  increase  of  wealth  and  population. 

To  support  this  general  statement,  the  follow¬ 
ing  specific  evidence  may  be  adduced : 

1.  Cotton  manufacture. — The  number  of  cot¬ 
ton  spindles  in  the  United  States,  according  to 
the  census  of  1860,  was  5,235,727.  From  1860 
to  1864  there  was  little  or  no  increase  of  cotton 
machinery,  but  possibly  a  diminution — many 
mills,  under  the  great  demand  for  army  clothing, 
having  been  converted  into  establishments  for 
the  manufacture  of  woollens.  The  number  of 
spindles,  however,  at  present  in  operation,  is 
shown  by  the  recent  returns  of  the  Arner- 


6 


ican  Cotton  Manufacturers  and  Planters’  Associa¬ 
tion  to  be  about  7,000,000,  a  gain  of  31-78  per 
cent,  in  from  four  to  five  years,  and  mainly  since 
the  termination  of  the  war  in  1865.  An  esti¬ 
mate,  based  on  less  perfect  data,  given  in  the  last 
annual  report  of  the  Commissioner,  fixed  this  in¬ 
crease  at  only  from  15  to  20  per  cent. 

2.  Woollen  manufacture. — Imperfect  statistics, 
collected  by  the  Northwestern  Woollen  Manu¬ 
facturers’  Association,  show  the  increase  in  the 
woollen  manufacture  of  seven  States  of  the  west, 
viz.,  Ohio,  Michigan,  Indiana,  Illinois,  Wiscon¬ 
sin,  Iowa,  and  Minnesota,  to  have  been  since 
1860,  as  follows : 


compared  with  1860 ;  and  of  60  per  cent,  as  com 
pared  with  1862. 

4.  Copper. — The  product  of  the  copper  mines 
of  Lake  Superior  from  1860  to  1867,  inclusive, 
is  returned  as  follows : 

Tons. 


1860 

1861 

1862, 

1863, 

1864, 

1865, 

1866, 
1867. 


6,000 

7,400 

9,062 

8,548 

8,472 

10,790 

10,375 

11,735 


No.  of  estab¬ 

Capital 

Sets  of  ma¬ 

lishments. 

Invested. 

chinery. 

1860 . 

259 

$1,616,740 

294 

1868 . 

557 

5,448,000 

995 

3.  Pig  iron  production. — In  the  department  of 
iron  industry  the  Commissioner  would  again  call 
attention  to  the  fact  stated  in  his  previous  re¬ 
port,  that  the  recent  average  annual  increase  in 
the  production  of  pig  iron  is  remarkably  uniform 
and  greatly  in  excess  of  the  ratio  of  increase  of 
population  ;  the  latter,  at  the  present  time,  being 
assumed  at  about  the  ratio  of  increase  from  1850 
to  1860,  viz.,  3%  per  cent.,  while  the  annual 
increase  in  the  product  of  pig  iron,  during  the 
last  five  years,  has  been  as  follows : 

Annual  product  of  pig  iron  from  1863  to  1868. 


Tons.  Annual  increase. 

1863  .  947,604 

1864  .  1,135,497  19.82  per  cent. 

1866  .  1,351,143  9.50  per  cent. 

1867  .  1,447,771  7.16  per  cent. 


1868,  (estimated)...  1,550,000  7.06  per  cent. 

For  the  seven  years  from  1860  (when  the  pro¬ 
duction  was  913,770  tons)  to  1867,  the  average 
annual  increase  has  been  8.35  per  cent. 

This  increase  is  in  excess  of  the  present  aver¬ 
age  annual  increase  of  the  pig  iron  product  of 
Great  Britain,  which  since  1863  has  been  as  fol¬ 
lows  : 


Tons.  Increase. 

1863  .  4,510,040 

1864  .  4,767,951  5.71  per  cent. 

1865  .  4,819,254  1.08  per  cent. 

Decrease. 

1866  .  4,523,897  6.50  per  cent. 


In  France  the  annual  product  of  pig  iron  was 
in  1866,  1,253,100  tons,  and  in  1867,  1,142,800 
tons,  showing  a  decline  of  110,300  tons. 

In  Austria  the  official  returns  of  the  iron  trade 
show  a  diminution  of  42  per  cent,  in  1866,  as 


During  the  same  period  the  copper  product  of 
Great  Britain  largely  declined,  viz :  from  15,968 
tons  in  1860,  to  11,153  tons  in  1866,  and  10,800  ( 
tons  in  1867. 

5.  Petroleum. — In  1862  the  export  of  petro¬ 
leum  was  returned  at  10,887,701  gallons. — 
During  the  years  1864  and  1865,  with  the  ad¬ 
vantage  of  a  high  premium  on  gold,  the  export 
increased  to  an  average  of  about  30,000,000  gal¬ 
lons.  In  1867  the  export  was  67,052,020  gal¬ 
lons,  and  for  1868  the  export  to  December  18  is 
returned  at  94,774,291  gallons. 

6.  Covl. — The  recent  increase  in  the  produc¬ 
tion  of  anthracite  coal,  which  may  be  taken  as  a 
measure  of  the  product  of  all  American  coal,  is 
reported  as  follows:  1862,  7,499,550  tons  ;  1866, 
12,379,490  tons;  1867,  12,650,571  tons;  1868, 
to  December  12,  13,500,000  tons.  During  the 
past  year  the  supply  of  anthracite  coal  has  been 
seriously  affected  by  strikes  and  constant  inter¬ 
ruptions  of  labor ;  otherwise  there  is  no  reason 
to  doubt  that  the  aggregate  product  mined 
would  have  shown  a  much  larger  increase  than 
has  been  indicated.  But  as  the  case  stands  the 
increase  which  has  actually  taken  place  proves 
that  the  conditions  of  ability  to  consume — which 
conditions  are  mainly  industrial — have  not  been 
impaired,  but  have  increased  during  the  past 
year  in  about  a  three-fold  ratio  to  the  estimated 
increase  of  population. 

7.  Lake  tonnage. — The  following  table,  pre¬ 
pared  for  the  Chicago  Board  of  Trade,  shows  the 
recent  increase  of  tonnage  upon  the  northern 
lakes,  (exclusive  of  canal  boats,)  for  the  years 
ending  March  31,  1864,  1866,  and  1867 : 

Vessels.  Tonnage.  Increase. 


1864 .  648  202,304 

1866 .  997  251,077  24  per  cent. 

1867* .  1,196  279,981  11  per  cent. 


8.  Consumption  of  sugar  and  coffee. — In  Eu¬ 
rope,  some  measure  of  the  prosperity  of  the  peo¬ 
ple  can,  it  is  believed,  be  obtained  by  noticing 
the  rise  or  fall  in  the  consumption  of  certain  ar¬ 
ticles  which  cannot  be  considered  as  belonging 
wholly  to  the  catalogue  of  necessities,  such  as 
sugars,  tea,  coffee,  <tc.  Making  use  of  this  stan¬ 
dard,  the  following  results  are  obtained : 


Gratifying  as  this  increase  is,  it  should  not  be  concealed  that  the  amount  of  tonnage  upon  the  lakes  is  even  now 
less  than  in  the  early  years  of  the  war,  viz  :  1862  and  1833.  On  the  other  hand,  the  aggregate  tonnage,  number  of 
vessels,  and  of  seamen,  which  cleared  from  the  port  of  Chicago  for  the  year  1867,  was  greater  than  for  any  former 
period,  as  is  shown  by  the  following  table  : 


1862 

1863, 

1867, 


Vessels. 

7,270 

8,457 

12,140 


Tonnage. 

1,915,554 

2,161,221 

2,512,676 


Seamen. 

66,936 

76,332 

106,344 


r 


The  average  monthly  consumption  of  imported 
sugars  for  the  eleven  months  ending  November 
30,  1868,  as  indicated  by  the  distribution  from 
the  five  principal  Atlantic  ports,  was  82,149,760 
pounds,  as  compared  with  70,088,480  pounds  for 
the  corresponding  period  of  1867,  and  68,296,600 
pounds  for  that  of  1865  ;  while  the  average 
monthly  consumption  of  coffee  for  1868,  de¬ 
duced  from  the  same  data,  has  been  8,294  tons, 
as  compared  with  7,560  tons  in  1867,  and  5,999 
tons  in  1866. 

Thirdly  :  The  continued  increase  in  the  ag¬ 
ricultural  PRODUCT  OF  THE  UNITED  STATES, 
WHETHER  MEASURED  BY  QUANTITY  OR  VALUE. - 

The  aggregate  crops  of  the  northern  States  for 

1867  were  believed  to  be  greater  than  those  of 
1  any  previous  year,  while  the  crops  for  the  past 

year  are  known  to  exceed  in  quantity  and  quali- 
ity  those  of  1867. 

As  specific  evidence,  a  few  statistics  are  pre¬ 
sented  which  have  recently  been  published  on 
what  seems  reliable  authority. 

In  the  State  of  Ohio  the  recent  increase  of 
sheep,  hogs,  and  cereals,  is  reported  as  follows : 

Number  of  sheep  in  1865 .  6,305,796 

Number  of  sheep  in  1868 .  7,580,000 

In  the  eight  years  last  past  the  sheep  of  Ohio 
are  reported  as  having  more  than  doubled. 

Number  of  hogs  in  1865 .  1,400,000 

Number  of  hogs  in  1868 . 2,100,000 

Cereal  crops,  including  wheat,  corn,  and  oats : 

Bushels. 

1865  .  107,414,278 

1866  .  118,061,911 

1868  .  141,000,000 

The  commercial  return  of  the  number  of  hogs 
packed  at  the  west  since  the  season  of  1864-5,  is 
as  follows: 

1865- 66 .  1,705,955 

1866- 67 .  2,490,791 

1867- 68 .  2,781,084 

This  latter  number  was,  however,  exceeded 
during  the  first  three  years  of  the  war. 

The  present  ratio  of  the  increase  of  the  crop 
of  Indian  corn  for  the  whole  country  is  put  by 
the  best  authorities  at  an  average  of  three  and 
t  one-half  per  cent,  per  annum.  The  crop  of  1859 
was  returned  by  the  census  at  830,451,707  bush¬ 
els,  and  adopting  the  above  ratio  of  increase,  the 
crop  of  1868,  acknowledged  to  be  a  full  one, 
must  be  estimated  at  1,100,000,000  bushels,  and 
-  if  sold  at  the  assumed  low  average  of  46  cents 
per  bushel,  would  net  over  $500,000,000. 

As  respects  the  agricultural  products  of  the 
southern  States,  the  returns  collected  by  the  As¬ 
sociation  of  cotton  manufacturers  and  planters 
before  referred  to,  show  that  the  crop  of  1867-8 
was  at  least  2,500,000  bales,  or  about  65  per 
cent,  of  the  average  crop  for  the  five  years  im¬ 
mediately  preceding  the  war  ;  while  for  the  year 

1868- 9  the  estimates  are  generally  in  favor  of 


2,700,000  bale's.  The  results  of  the  two  crops 
upon  the  interests  of  the  south  will,  however,  be 
materially  different.  During  the  crop  year 
1867-8,  the  south  did  not  raise  food  sufficient  for 
its  own  subsistence,  and  a  large  part  of  the  pro¬ 
ceeds  of  the  cotton  of  that  year  were  used  for 
the  purchase  of  food,  and  also  to  repay  advances 
for  the  previous  purchase  of  stock  and  imple¬ 
ments.  This  year,  1868-9,  the  south  has  raised 
food  in  excess  of  its  necessities,  and  the  proceeds 
of  nearly  the  entire  crop  may  be  considered  in 
the  light  of  a  surplus  for  future  development. 

The  following  are  the  estimated  cotton  crops 
of  the  south  since  the  termination  of  the  war : — 
1865—66,  2,154,476  bales;  1866-’67,  1,954,988 
bales;  1867-68,  2,498,895  bales;  1868-69,  esti¬ 
mated  2,700,000  bales. 

The  culture  of  rice  at  the  south,  which  at  the 
termination  of  the  war  practically  amounted  to 
nothing,  lias  also  so  far  been  restored  that  the 
product  of  the  present  year  is  estimated  at  70,000 
tierces  ;  an  amount  probably  sufficient  for  home 
consumption,  and  giving  certain  promise  of  a 
speedy  renewal  of  the  former  extensive  exports 
of  this  article. 

The  following  is  an  estimate  of  the  tobacco 
crops  of  the  United  States  since  1850,  prepared 
by  a  committee  of  the  trade  for  the  use  of  the 
Committee  of  Ways  and  Means,  at  the  first  ses¬ 
sion  of  the  40th  Congress : 


Pounds. 

1850 .  201,350,663 

1863  .  267,353,082 

1864  .  177,460,229 

1865  .  183,316,953 

1866... .  325,000,000 

1867 .  250,000,000 


Fourthly,  railway  extension  and  movement. 
— The  total  number  of  miles  of  railroads  in  the 
United  States  at  the  close  of  1835  was  1,098;  at 
the  close  of  1867,  39,244;  giving  an  average  in¬ 
crease  of  1,156  for  each  year  of  the  intervening 
period.  The  annual  progress  of  railroad  exten¬ 
sion  during  and  subsequent  to  the  war  is  shown 
by  the  following  table : 


Miles. 

1860  . 1,846 

1861  .  621 

1862  .  864 

1863  .  1,050 

1864  .  738 

1865  .  1,277 

1866  .  1,832 

1867  .  2,227 

1868  (estimated) .  2,500 


It  will  thus  be  seen  that  since  and  including 
the  year  1865,  the  year  of  the  termination  of  the 
war,  nearly  8,000  miles  of  railroad  have  been 
constructed  in  the  United  States,  and  that  the 
present  ratio  of  increase  is  more  than  double  the 
average  of  railroad  history  prior  to  1860,  (viz: 
1,156  miles.) 

On  the  other  hand  the  average  annual  increase 
of  railroads  in  Great  Britain  from  1860  to  1865 
was  only  571  miles,  and  in  France  during  the 
same  period  509  miles. 

An  analysis  of  the  railway  system  of  the  Uni¬ 
ted  States,  which  has  been  made  for  the  first 


8 


time  during  the  past  year.*  presents  us,  however, 
with  results  which,  were  they  not  founded  on  in¬ 
controvertible  data,  would  seem  fabulous.  Thus 
the  ratio  of  the  gross  earnings  to  cost  of  the  rail¬ 
roads  of  the  whole  country  for  the  year  1867  was 
equal  to  about  21  per  cent. ;  for  the  northern 
States  about  23  per  cent.  The  railroads  of  the 
country,  therefore,  now  receive  their  cost  in  a 
little  more  than  four  years,  and  this  ratio  of  gross 
earnings  to  cost  is  steadily  increasing  with  the 
increase  of  the  railway  system  and  traffic  of  the 
country. 

Again,  “  the  average  number  of  tons  of  freight 
carried  upon  the  railroads  of  the  country  is  esti¬ 
mated  at  2,000  tons  per  mile  of  road.  The  ton¬ 
nage  of  the  railroads  of  Massachusetts,  in  1867, 
equalled  3,812  tons  per  mile;  that  of  the  rail¬ 
roads  of  New  York,  3,100  tons ;  and  that  of  Penn¬ 
sylvania,  6,000  tons.  The  gross  tonnage  of  the 
39,284  miles  of  railroad  in  existence  at  the  close 
of  1867,  at  the  above  estimate,  was  equivalent  to 
78,568,000,  and  if  we  deduct  from  this  amount 
15,000,000  tons  for  coal  and  other  cheap  mate¬ 
rial,  and  an  equal  amount  for  duplications  of  the 
same  tonnage  on  different  roads,  there  will  be 
left  48,488,000  tons  of  merchandise  moved  annu¬ 
ally  upon  all  the  railways  of  the  United  States. 
At  an  estimated  value  of  $150  per  ton  for  this 
tonnage,  the  total  annual  value  of  the  merchan¬ 
dise  traffic  of  all  the  roads  at  present  equals 
$7,273,200,000.” 

The  total  amount  of  tonnage  transported  on  all 
the  roads  of  the' country  for  the  year  1851,  is  es¬ 
timated  by  good  authorities  at  not  exceeding 
10,000,000  tons.  If  from  this  we  deduct  3,000, - 
000  tons  for  coal  and  other  cheap  materials,  and 
1,000,000  tons  for  duplications,  there  will  be  left 
a  merchandise  tonnage  of  6,000,000  tons  in  1851, 
against  48,488,000  tons  in  1867.  The  rate  of 
increase  in  this  period,  therefore,  has  been  equal 
to  800  per  cent.,  and  the  actual  increase  42,488,- 
000  tons.  At  the  estimated  value  of  $150  per 
ton,  the  increase  in  the  value  of  the  railway  mer¬ 
chandise  of  the  country  in  sixteen  years  has  been 
$6,373,200,000,  or  at  the  rate  of  nearly  $400,- 
000,000  per  annum.  And  it  should  also  be  no¬ 
ted  that  one-half  of  this  total  increase  has  taken 
place  in  the  seven  years  that  have  elapsed  since 
1860. 

The  increased  movement  on  the  railways  of 
the  United  States,  which  in  the  main  represents 
increased  product,  also  affords  some  indication 
of  the  progress  of  the  development  of  the  coun¬ 
try.  Thus,  the  earnings  of  the  ten  principal 
railway  lines  of  the  west  exhibit  for  the  first  ten 
months  of  1868  (with  a  decrease  rather  than  an 
increase  of  freight  rates)  a  gain  of  eight  per  cent, 
as  compared  with  earnings  of  the  corresponding 
months  for  the  year  1867.  Taking  also  the 
movements  on  the  railways  and  canals  of  the 
State  of  New  York,  which  are  known  to  be  ac¬ 
curate,  and  at  the  same  time  accessible,  as  a 
measure  of  comparison  for  the  whole  country,  we 
find  that  the  total  annual  tonnage  increased  from 
7,138,917  tons,  in  1858,  to  16,032,006,  in  1868, 
an  increase  of  124  per  cent. ;  while  the  annual 
value  of  the  tonnage  thus  moved  increased  from 


$486,816,505,  in  1858,  to  $1,723,330,207,  in  1867, 
a  gain  of  254  per  cent. 

An  examination  of  the  railroad  statistics  of  the 
whole  country  for  the  above  period  further  indi¬ 
cates  that  during  the  ten  years  above  referred 
to,  or  from  1858  to  1868,  the  increase  of  tonnage 
moved  on  the  railways  of  the  United  States  has 
been  at  a  rate  sixteen  times  greater  than  the  ratio 
of  the  increase  of  population. 

Telegraphic  extension. — The  recent  extension 
of  the  telegraphic  system  of  the  United  States  is 
reported  to  be  approximately  as  follows : 


1866,  miles  of  wire . . .  2,000 

1867,  miles  of  wire . 3,OOo 

1868,  miles  of  wire .  6,00q 


REDUCTION  OF  STATE  DEBTS. 

As  affording  some  further  indication  of  the 
material  prosperity  of  the  country,  the  Com¬ 
missioner,  as  in  his  former  report,  would  here 
call  attention  to  the  progress  which  has  been 
made  during  the  past  year  in  the  reduction  of 
the  indebtedness  of  the  several  States,  incurred 
in  great  part  by  reason  of  the  war.  Thus,  for 
example,  the  reduction  of  the  debt  of  the  State 
of  New  Hampshire  for  the  year  1868  was  6.9  per 
cent.,  of  Vermont,  16.2  per  cent,  as  against  7.7 
per  cent,  in  1867;  of  Rhode  Island,  13.7  per 
cent.,  Connecticut,  3.4  per  cent.,  Kentucky,  21 
per  cent.,  Ohio,  4.5  per  cent.,  Michigan,  6.4  per 
cent.,  and  Indiana,  23  per  cent.  During  the 
years  1867  and  1868  the  State  of  Illinois  reduced 
her  debt  30.5  per  cent. ;  while  New  Yprk,  which 
has  comparatively  the  largest  State  indebted¬ 
ness,  reduced  her  debt  during  the  past  year  to 
the  extent  of  about  10  per  cent.,  as  compared 
with  a  reduction  of  7.6  per  cent,  for  the  year 
1867.  West  Virginia,  Kentucky,  Iowa,  Wiscon¬ 
sin,  Nebraska  and  Minnesota  have  at  the  present 
time  practically  no  indebtedness. 

AGENCIES  CONCERNED  IN  NATIONAL  DEVELOPMENT. 

One  subject  at  this  point  of  our  inquiry  is  well 
worthy  of  attention.  It  is  this : .  To  what  agen¬ 
cies  are  our  seemingly  fabulous  national  devel¬ 
opment  to  be  attributed,  and  to  what  extent  es¬ 
pecially  is  it  to  be  referred  to  positive  legisla¬ 
tion? 

In  answer  to  this  it  is  to  be  said  that  all  in¬ 
vestigation  clearly  shows  that  these  agencies 
have  been  mainly  two,  viz:  first,  great  natural 
resources  in  respect  to  abundant  and  fertile  ter¬ 
ritory,  great  natural  facilities  for  intercommuni¬ 
cation,  abundant  and  cheap  raw  material,  and 
diversity  without  insalubrity  of  climate;  and 
secondly,  a  form  and  spirit  of  government  which 
heretofore  has  left  man  and  capital,  over  an  area 
almost  continental,  free  and  unrestrained  to  work 
out  their  own  development.  Since  1840,  espe¬ 
cially,  other  agencies  have  come  in  as  powerful 
adjuncts,  viz :  a  continued  influx  of  population 
and  capital  from  the  old  world  ;  a  continued  in¬ 
vention  and  application  of  labor-saving  machine¬ 
ry,  and  a. most  rapid  extension  of  the  railway 


*  Rise,  Progress.  Cost,  and  Earnings  of  the  Railroads  of  the  United  States. — H.  V.  Poor,  New  York,  1868. 


9 


system ;  which  last,  by  giving  a  market  to  all 
the  products  of  our  national  domain,  has  greatly 
stimulated  the  spirit  of  industry  and  enterprise. 
With  these,  also,  should  undoubtedly  be  included 
the  purchase  of  California  and  the  discovery  of 
gold  on  the  Pacific. 

As  respects  the  relation  of  legislation  by  the 
national  government  to  the  results  under  consid¬ 
eration,  if  we  except  the  adoption  of  a  liberal  pol¬ 
icy  in  the  disposition  of  the  public  lands,  it  is  dif¬ 
ficult,  at  least  for  the  period  which  elapsed  be¬ 
tween  1840  and  1860,  to  affirm  much  that  is  posi- 
,  tive,  unless,  in  conformity  with  the  maxim,  that 
that  government  is  best  which  governs  least,  ab¬ 
sence  of  legislation  is  to  be  regarded  in  the  light 
of  a  positive  good.  If  important  results  followed 
the  acquisition  of  California,  such  results  were 
j  certainly  neither  foreseen  nor  anticipated ;  while 
as  regards  commercial  legislation^  a  review  of  all 
the  facts  cannot  fail  to  suggest  a  doubt  whether 
the  evils  which  have  resulted  from  instability 
have  not  far  more  than  counterbalanced  any  ad¬ 
vantage  that  may  have  proceeded  from  the  expe¬ 
rience  of  a  fluctuating  policy. 

The  Commissioner  is  well  aware  that  this  opin¬ 
ion  will  not  be  readily  accepted  by  those  who 
have  been  educated  to  believe  that  the  industrial 
and  commercial  prosperity  of  the  country  was 
seriously  affected  by  the  legislation  which  took 
place  during  the  years  which  elapsed  from  1842 
to  1846.  But  upon  this  point  all  investigation 
shows  that  the  facts  are  entirely  contrary  to  what 
may  be  regarded  as  the  popular  belief,  which,  in¬ 
deed,  in  this  particular,  would  appear  to  be  based 
on  little  else  than  mere  assertions,  which,  remain¬ 
ing  for  a  long  time  unquestioned,  have  at  last  ac¬ 
quired  the  force  of  accepted  historical  truth. 
Thus,  for  example,  it  has  been  constantly  assert¬ 
ed,  both  in  Congress  and  out  of  Congress,  that 
the  production  of  pig  iron  was  remarkably  stim¬ 
ulated  under  the  tariff  of  1842— rising  from  220,- 
000  tons  in  1842,  to  800,000  tons  in  1848- — and 
that  under  the  tariff  of  1846  the  same  industry 
was  remarkably  depressed.  Now,  these  asser¬ 
tions  may  be  correct,  but  the  most  reliable  sta¬ 
tistics  to  which  we  have  access,  viz :  those  gath¬ 
ered  by  the  American  Iron  Association,  instruct 
us  as  follows : 

Production  of  pig  iron  in  1880,  165,000  tons; 
in  1840,  347,000  tons.  Increase  in  ten  years,  110 
per  cent. 

Production  in  1845,  486,000  tons;  increase  in 
five  years,  40  per  cent. 

Production  in  1850,  564,000  tons;  increase  in 
Hen  years,  62  per  cent. 

Production  hi  1855,  754,000  tons;  increase  in 
five  years,  33  per  cent. 

Production  in  1860,  913,000  tons;  increase  in 
jten  years,  61  per  cent. 

It  thus  appears  that  the  great  annual  increase 
in  the  production  of  pig  iron  took  place  prior  to 
the  year  1840,  and  for  thirty  years  was  remark¬ 
ably  uniform  at  tfce  rate  of  10  to  11  per  cent,  per 
annum ;  and  that  since  then,  no  matter  what  has 
been  the  character  of  the  legislation,  whether  the 
tariff  was  low  or  high,  whether  the  condition  of 
the  country  was  one  of  war  or  peace,  the  increase 
of  the  production  has  been  at  the  average  of 


about  8  per  cent,  per  annum,  or  more  than  double 
the  ratio  of  the  increase  of  population. 

Again,  as  another  curious  illustration  of  an  ap¬ 
parent  misconception  of  the  effects  of  past  legis¬ 
lation  upon  the  development  of  the  country,  take 
the  following  paragraph  from  the  recent  report 
of  a  Congressional  committee : 

No  business  man  of  maiure  age  need  be  reminded  of 
ibe  revulsion  which  followed  in  consequence  of  the  free 
trade  system  of  1816 — the  decline  of  production,  of  im¬ 
migration,  of  wages,  of  public  or  private  revenue,  until 
the  culmination  of  the  system  in  the  tariff  of  1857,  with 
the  memorable  crises  of  that  period  ;  the  general  ruin  of 
manufacturers  and  merchants  ;  the  suspended  payments 
of  the  banks  ;  the  reduction  of  the  treasury  to  the  verge 
of  bankruptcy,  and  the  unparalleled  distress  among  the 
unemployed  poor. 

Now,  with  all  due  deference  to  the  committee, 
the  Commissioner  would  ask  attention  to  the  fol¬ 
lowing  statistics  bearing  on  the  question  under 
consideration : 

Increase  in  the  production  of  pig  iron :  in  1 840, 
347,000  tons;  in  1845,  486,000;  in  1850,  564,- 
755;  1855,754,178;  1860,913,770. 

Increase  in  the  production  of  Pennsylvania  an¬ 
thracite  coal:  1842,  1,108,418  tons;  1846,  2,344,- 
005;  1847,  2,882,309;  1849,  3,217,641 ;  1855, 
6,486,097;  1860,8,143,938. 

Increase  in  the  domestic  consumption  of  cot¬ 
ton,  north  of  the  Potomac:  1840,  297,000  bales  ; 
1845,  422,000;  1849-’50,  476,000;  1851-’52, 

588,000;  1855,  633,000;  1858-59,  760,000; 

1859-’60,  792,000. 

Increase  in  immigration :  1840,84,000;  1845, 
174,000;  1850,  310,000;  1854,427,000. 

Increase  in  public  revenue:  1840,  $19,000,000: 
1845,  $29,000,000;  1850,  $52,000,000;  1855, 
$74,000,000. . 

Increase  of  national  wealth:  From  1840  to 
1850,  80  per  cent. ;  from  1850  to  I860,  126  per 
cent.  In  1854  the  six  per  cent,  bonds  of  the 
United  States,  issued  in  1848,  commanded  a  pre¬ 
mium  of  21  per  cent. 

Commercial  tonnage  of  the  United  States:  In 
1840,  2,180,000;  1850,  3,535,000;  1860,  5,353,r 
000. 

Exports  and  imports :  In  1840,  $239,000,000; 
1845,  $231,000,000;  1850,  $330,000  ;  1855,  $536,- 
000,000;  1860,  $762,000,000. 

Increase  in  ship-building:  1842,  129,084  tons; 
1845,  146,018;  1850,  272,219;  1855,  583,450. 

Annual  increase  of  railroad  construction:  1842, 
491  miles;  1845,256;  1847,669;  1849,  1,369; 
1853,2,452;  1856,  3,643  miles. 

In  short,  there  does  not  seem  to  be  any  reliable 
evidence  which  can  be  adduced  to  show  that  the 
change  which  took  place  in  the  legislative  com¬ 
mercial  policy  of  the  country  in  1846  had  any 
permanent  or  marked  effect  whatever ;  while,  on 
the  other  hand,  the  study  of  all  the  facts  pertain¬ 
ing  to  national  development  from  1840  to  1860, 
and  from  1865  to  the  present  time,  unmistakably 
teaches  this  lesson ;  that  the  progress  of  the 
country  through  what  we  may  term  the  strength 
of  its  elements  of  vitality  is  independent  of  legis¬ 
lation  and  even  of  the  impoverishment  and  waste 
of  a  great  war.  Like  one  of  our  own  mighty 
rivers,  its  movement  is  beyond  control.  Suc¬ 
cessive  years,  like  successive  affluents,  only  add 
to  and  increase  its  volume ;  while  legislative  en- 


10 


actments  and  conflicting  commercial  policies,  like 
the  construction  of  piers  and  the  deposit  of  sunk¬ 
en  wrecks,  simply  deflect  the  current  or  consti¬ 
tute  temporary  obstructions.  In  fact,  if  the  na¬ 
tion  has  not  yet  been  lifted  to  the  full  compre¬ 
hension  of  its  own  work,  it  builds  determinately, 
as  it  were,  by  instinct. 

EFFECT  OF  THE  WAR  IX  CHECKIXG  NATIONAL  DE¬ 
VELOPMENT. 

What  would  have  been  the  condition  of  pro¬ 
gress  during  the  decade  from  1860  to  1870,  had 
not  the  war  intervened,  is  a  question  that  cannot 
be  definitely  answered ;  but  that  many  branches 
of  production  would  have  experienced  a  develop¬ 
ment  limited  only  by  the  amount  of  available 
capital  and  skilled  labor  cannot  be  doubted.  In¬ 
vestigation  shows  that  in  many  departments  of 
industry  the  cost  of  skilled  labor  and  of  raw  ma¬ 
terial  in  Great  Britain  and  the  United  States 
very  closely  approximated  in  1860;  while  the 
advantage  in  the  cost  of  food  of  domestic  produc¬ 
tion,  and  of  certain  articles  of  import,  such  as 
sugars,  teas,  and  coffee,  was  largely  in  favor  of 
this  country.  In  1860  American  coarse  cottons 
were  obtaining  the  command  of  most  extra-Eu¬ 
ropean  markets.  In  1860,  wooden  ships,  allow¬ 
ing  for  quality,  could  be  built  cheaper  in  the 
United  States  than  in  any  other  country,  al¬ 
though  it  is  a  noticeable  fact  that,  probably  from 
an  inability  to  supply  the  demand  for  iron  ves¬ 
sels,  the  decline  of  the  ship-building  interest  in 
the  United  States,  so  much  commented  on  of 
late,  really  began  several  years  before  the  break¬ 
ing  out  of  the  war.* 

In  1860,  copper  in  the  pig  was  exported  from 
the  United  States  in  profitable  competition  with 
the  mines  of  Cuba  and  of  South  America ;  and 
evidence  has  also  been  presented  to  the  Commis¬ 
sioner  showing  that  in  some  instances  pig  iron 
was  manufactured  with  profit  at  rates  far  lower 
than  the  average  of  Europe,  while  the  purchas¬ 
ing  power  of  the  wages  paid  for  the  same  was 
considerably  greater  than  at  present. 

But  the  war  came,  bringing  with  it  certain  in¬ 
evitable  results,  and  these  results  now  constitute 
the  per  contra  upon  the  national  ledger  before  re¬ 
ferred  to.  The  feature  about  them  which,  in 
contrast  with  the  facts  above  cited,  seems  con¬ 
tradictory  and  paradoxical,  is  that  while  our  re¬ 
sources  as  a  nation  have,  on  the  whole,  continued 
unimpaired;  while  we  continue  to  possess  and 
enjoy  the  greatest  area  of  fertile  territory,  the 
most  unrivalled  means  of  intercommunication, 
natural  or  artificial,  and  the  freest  and  most  pop¬ 
ular  form  of  government ;  while  the  aggregate 
annual  products  of  the  soil  have  continually  in¬ 
creased  and  not  diminished,  and  those  of  the  an¬ 
vil,  the  forge,  the  loom,  and  the  spindle  have  also 
multiplied ;  there,  is,  nevertheless,  hardly  a  single 
domestic  article  or  product,  agricultural  or  man¬ 
ufactured,  in  behalf  of  which  the  claim,  either 
directly  or  indirectly,  has  not  been  made  within 
the  last  two  years  that  the  same  could  be  pro¬ 
duced  to  greater  advantage  or  profit  in  some 
other  country  than  the  United  States ;  increased 


protection  even  being  demanded  for  oil  paintings, 
rough  building  stone,  Indian  corn,  fire-wood,  ta¬ 
bles,  and  ice — the  last  to  the  extent  of  15  per 
cent.,  gold;  and  this  claim  the  Commissioner  is 
obliged  to  admit  is,  to  a  very  great  extent,  in 
exact  accordance  w  ith  the  truth. 

The  United  States  finds  itself,  therefore,  in 
the  anomalous  position  of  a  great  nation,  favored 
in  many  respects  as  no  other  nation  upon  which 
the  sun  shines,  unable  to  exchange  its  products 
on  terms  of  equality  with  the  products  of  any 
other  country;  the  marked  exception  being 
always  its  product  or  supplies  of  the  precious* 
metals.  Inquiry  is  now  to  be  made  into  the 
causes  to  which  these  results  must  be  attributed, 
and  as  to  the  measures  which  seem  likely  to 
prove  remedial,  avoiding  in  so  doing,  to  the 
greatest  extent  possible,  any  repetition  of  the- 
facts  and  arguments  which  have  been  presented 
by  the  Commissioner  in  his  former  reports,  or 
by  others  who  have  discussed  this  subject ;  and 
aiming  to  present  rather  the  results  of  a  contin¬ 
ued  investigation  and  of  an  enlarged  experience. 

AGENCIES  AVERSE  TO  NATIONAL  DEVELOPMENT. 

The  immediate  cause  of  the  anomalous  condi¬ 
tion  of  affairs  in  question  must  unquestionably 
be  referred  to  the  greatly  increased  cost  of 
nearly  all  forms  of  labor  and  commodites  as 
compared  with  the  price  for  the  same  that  pre¬ 
vailed  in  the  decade  immediately  preceding  the 
war ;  while  these  in  turn  must  be  regarded  as 
the  resultant  mainly  of  three  agencies  growing 
out  of  the  war,  viz :  irredeemable  paper  currency  ; 
unequal  and  heavy  taxation,  and  a  limited  supply 
of  skilled  labor,  the  last  manifesting  itself  at  the 
present  time  in  specialities  rather  than  in  gen¬ 
eral. 

INFLUENCE  OF  AN  IRREDEEMABLE  PAPER  CURRENCY. 

As  the  specific  influence  of  the  first  agency 
has  been  of  late  so  often  and  so  thoroughly  dis¬ 
cussed,  the  Commissioner  will  only  ask  atten¬ 
tion,  under  this  head,  to  a  few  points  of  pre¬ 
sumed  novelty  or  interest ;  and,  first,  to  a  spe¬ 
cific  statement  of  actual  experience,  illustrative 
of  the  manner  in  which  an  irredeemable  paper 
currency,  or  what  is  the  same  thing,  a  national 
abnegation  of  specie  payments,  unavoidably 
tends  to  destroy  all  profitable  commercial  rela¬ 
tions  with  foreign  countries  in  which  trade  and 
industry  is  connected  on  a  specie  basis.  The 
statement  is  furnished  to  the  Commissioner  by 
a  manufacturer  of  furniture  in  one  of  the  middle 
States,  who,  previous  to  the  wTar,  had  built  up* 
an  extensive  export  business  to  the  West  Indies, 
Central  and  South  America,  of  a  variety  of 
“  cane-seated  ”  and  “  cane-backed  ”  furniture 
suited  to  warm  latitudes. 

Thus  on  the  1st  of  March,  1861,  gold  and  cur-’ 
rency  being  at  par,  $1,000  in  gold  possessed  a 
purchasing  power  sufficient  to  obtain  for  the 
South  American  importer  111  1-9  dozen  of  what 
are  termed  in  the  trade,  “  ordinary  square-post 
cane-seat  chairs.”  About  the  1st  of  January, 
1862,  gold  began  to  command  a  premium,  and 


*  The  largest  amount  of  tonnage  constructed  in  any  one  year  in  our  history  was  in  1855,  viz  :  583,450  tons.  From 
this  period  construction  began  to  decline,  being,  in  1856,  469,394  ;  1857, 378,805  ;  1858,  242,287  ;  1859,  156,602  ;  and 
in  1860,  212,892. 


11 


advanced  during  the  next  three  years  with  great 
rapidity.  This  movement  was  not,  however, 
participated  in  at  first,  to  any  considerable  ex¬ 
tent,  by  either  labor  or  commodities,  and  in 
consequence,  the  purchasing  power  of  gold 
greatly  increased ;  so  much  so  that  on  the  1st 
of  July,  1864,  the  $1,000  gold  which  in  1861 
bought  111  1-9  dozen  chairs,  then  bought  143 
dozen.  Under  these  circumstances,  as  was  to 
be  expected,  trade  increased,  as  the  foreign  pur¬ 
chaser  found  the  American  market  by  far  the 
best  for  his  interest;  but  from  July,  1864,  a 
movement  commenced  in  an  exactly  opposite 
direction,  gold  receding  and  labor  and  commodi¬ 
ties  advancing  in  very  unequal  ratios.  Thus 
in  January,  1865,  the  $1,000  gold,  which  four 
years  previous  had  a  purchasing  power  of  111 
J  1-9  dozen  chairs,  and  on  the  1st  of  July,  1864, 
of  143  dozen,  then  commanded  but  126%  dozen; 
in  February,  1866,  a  still  smaller  number,  viz: 
91^  dozen,  and  ultimately  attained  its  minimum 
in  January,  1867,  when  the  purchasing  power 
of  the  sum  named  was  only  89%  dozen.  From 
this  point  the  purchasing  power  has  gradually 
increased,  and  for  the  past  year,  1868,  has  re¬ 
mained  at  the  rate  of  about  102  dozen,  or  nine 
dozen  less  than  could  be  bought  with  the  same 
money  in  1861.* 

The  result  has  been  that  the  foreign  purchas¬ 
er  now  goes  to  France  or  Germany;  while  the 
products  of  American  industry,  in  the  form  of 
furniture,  being  no  longer  available  to  exchange 
for  sugars,  spices,  or  dyewoods,  gold  has  neces¬ 
sarily  been  substituted ;  and,  to  use  the  words 
of  the  manufacturer  describing  his  condition,  “un¬ 
less  there  is  a  speedy  return  to  specie  payments, 
custom  will  soon  fix  the  channels  and  currents 
of  trade  that  any  attempt  on  my  part  to  divert 
them  will  be  attended  -with  great  difficulty;” 


and  what  has  thus  been  shown  to  be  the  case  in 
respect  to  the  export  trade  of  the  United  States 
in  furniture,  may  be  accepted  as  true  of  almost 
every  other  manufactured  product,  which  as  a 
nation,  we  were  accustomed,  before  the  war,  to 
exchange  for  foreign  commodities. 

[We  omit  here  a  paragraph  on  the  amount  of  currency 
in  use  and  required.] 

COMPARISON  OF  PRICES  OF  LABOR  AND  COMMODITIES, 

1860-61  AND  1867-68. 

The  present  abnormal  condition  and  the  re¬ 
cent  fluctuations  in  the  prices  of  labor  and  com¬ 
modities  also  properly  comes  up  for  considera¬ 
tion  in  connection  with  the  subject  of  an  irre¬ 
deemable  paper  currency — the  chief  agency  to 
which  the  disturbances  in  question  must  be  re¬ 
ferred. 

The  investigations  previously  instituted  by  the 
Commissioner  have  established  the  fact,  that  up 
to  the  commencement  of  the  year  1867,  the  gen¬ 
eral  effect  of  the  agencies  growing  out  of  the 
war  had  been  to  occasion  an  average  advance  in 
the  price  of  commodities  to  the  extent  of  about 
90  per  cent.,  while  the  corresponding  average 
advice  in  wages  was  not  in  excess  of  60  per 
cent. 

He  has  now  to  ask  attention  to  the  conclusions 
which  another  year’s  experience  and  investiga¬ 
tion  have  brought  to  us  in  relation  to  this  sub¬ 
ject.  The  result  of  long  and  careful  investiga¬ 
tions  in  respect  to  the  retail  prices  of  the  leading 
articles  of  domestic  consumption  by  operatives 
in  the  manfacturing  towns  of  New  England,  the 
middle,  and  some  of  the  western  States,  have 
afforded  data  for  accurately  estimating  the  in¬ 
crease  in  the  prices  of  such  articles  in  1867  as 
compared  with  1860-61.  They  establish  the 
following  conclusions: 


*  The  fluctuations  in  prices  above  referred  to  are  exhibited  in  detail  in  the  following  table: 


Table  showing  the  purchasing  power  of  gold  as  applied  to  chairs,  ( ordinary  square-post ,  cane  seat,) 
from  March  1,  1861,  to  July  1,  1868. 


a 

<» 

u  0 

|g 

■§ 

sg 

£f" 

■3  a 

<0  2 
1“ 

!| 

1*3 

Ot  ©  O 
P.  60 

March  1,  1861 . 

Par. 

$9  00 

9  50 

111  1-9 

January  1,  1863 . 

135 

141 

February  21,  1863 . 

162% 

129% 

138% 

152 

167% 

173% 

188% 

236 

10  50 

155% 

117% 

115 

August  1.  1863 . 

11  00 

September  17.  1863 . 

12  00 

January  1,  1864 . 

12  50 

121  3-5 

April  1,  1864 . . . . 

13  50 

124 

April  22,  1864 . 

14  50 

119% 

125% 

June  1.  1864 . 

15  00 

July  1,  1864 . . . 

16  50 

143 

August  1,  1864 . . 

255 

18  00 

141% 

126% 

January  2,  1865 . . . 

228 

18  00 

February  16,  1866 . 

137% 

145 

15  00 

91% 

96% 

89% 

91% 

September  17,  1866 . 

15  00 

January  14,  1867 . 

134% 

137% 

144% 

138% 

138% 

15  00 

June  4,  1867 . 

15  00 

September  16,  1867 . 

13  50 

106% 

April  1, 1868 . 

13  50 

102% 

102% 

July  1,  1868 . 

13  50 

12 


That  the  average  increase  in  the  price  of  gro¬ 
ceries  and  provisions  in  1867,  as  compared  with 
1860-61,  was  88  per  cent. ;  or,  calculated  on  the 
basis  of  the  quantities  consumed  on  an  average 
by  a  number  of  workmen,  a  little  in  excess  of 
86  per  cent. ;  of  domestic  dry  goods,  including 
clothing,  86%  per  cent. ;  of  fuel,  57  per  cent;  of 
house-rent,  65  per  cent.  This  latter  average  is, 
however,  largely  affected  by  the  circumstance 
that  in  New  England,  where  manufacturing 
companies  or  corporations  very  generally  own 
the  tenements  occupied  by  their  operatives,  rents 
have  not  been  advanced  to  any  considerable  ex¬ 
tent.  Excluding  New  England  from  the  calcu¬ 
lation,  the  average  advance  in  rents  for  1867,  as 
compared  with  1860-61,  must  be  estimated  at  a 
much  higher  figure.  Thus  in  the  smaller  manu¬ 
facturing  towns  of  Pennsylvania  the  average  in¬ 
crease  in  the  rents  of  houses  occupied  by  opera¬ 
tives  is  believed  to  have  been  about  81  per  cent., 
and  in  New  Jersey  111  per  cent.  In  the  cities 
of  New  York,  Philadelphia,  Newark,  and  Pitts¬ 
burgh,  the  increase  has  been  from  90  to  100  per 
cent.* 

The  average  of ,  these  results,  proportioned  to 
the  ascertained  varying  ratio  of  expenditure 
under  the  several  heads,  shows  that  for  the  year 
1867,  and  for  the  first  half  of  the  year  1868,  the 
average  increase  of  all  the  elements  which  con¬ 
stitute  the  food,  clothing,  and  shelter  of  a  family 
has  been  about  78  per  cent.,  as  compared  with 
the  standard  prices  of  1860-61.  f 

The  result,  in  general,  of  this  large  increase 
in  the  prices  of  commodities  of  domestic  con¬ 
sumption  to  the  laboring  man  becomes  evident, 
by  comparing  such  increase  with  the  increase  in 
the  rates  of  wages  during  the  period  under  com¬ 
parison — which  rates,  for  the  year  1867,  as 
compared  with  1861-61,  were  as  follows:  For 
unskilled  mechanical  labor,  50  per  cent. ;  for 
skilled  mechanical  labor,  60  per  cent. 


In  the  case  of  unmarried  men,  the  comparison 
is  more  favorable  than  as  respects  men  with 
families;  the  average  increase  in  the  prices  of 
the  article  consumed  by  them  having  been  only 
about  73  per  cent.;  as,  for  example,  board  in 
manufacturing  towns,  71  per  cent. ;  clothing, 
irrespective  of  domestic  dry  goods,  75  per  cent.; 
ordinary  boots  and  shoes,  60  per  cent. 

Skilled  workmen,  who  are  at  the  same  time 
unmarried,  and  who  are  in  the  receipt  of  wages 
from  65  to  70  per  cent,  in  advance  of  the  rates 
paid  in  1860,  find  their  condition,  as  regards  net 
income,  approximately  the  same  as  before  the 
war. 

The  returns  to  numerous  and  careful  inquiries, 
instituted  at  the  request  of  the  Commissioner, 
by  proprietors  or  superintendents  of  manufactur¬ 
ing  establishments  in  the  New  England,  middle, 
and  some  of  the  western  States,  also  afford  much 
interesting  information  relative  to  the  average 
weekly  earnings  and  expenditures  of  American 
operatives,  grouped  as  families,  in  the  years 
1860  and  1867;  and  also  in  respect  to  the  com¬ 
parative  opportunities  enjoyed  by  such  families 
at  the  two  periods  referred  to,  for  the  realization 
of  a  surplus  over  and  above  the  expenditures 
absolutely  necessary  for  shelter  and  subsist¬ 
ence. 

The  following  table,  based  on  indisputable  and 
actual  data,  shows  the  average  aggregate  weekly 
earnings  in  1867  of  families  of  various  sizes,  in 
different  sections  of  the  country;  one  or  more 
members  of  each  of  which  were  employed  in 
some  branch  of  manufacturing  industry ;  their 
average  Weekly  expenditures  for  provisions,  fuel, 
house-rent,  <kc.,  and  the  balance  remaining  to 
them,  over  and  above  such  expenditure,  avail¬ 
able  either  for  accumulation  and  capital,  or  for 
the  purchase  of  clothing,  or  articles  of  enjoyment 
and  luxury. 


*  For  1868,  the  returns  very  generally  indicate  a  large  advance  in  rents,  and  also  for  the  latter  half  of  the  year  in 
fuel ;  the  advance  in  these  two  items  alone  being  estimated  as  sufficient  to  counterbalance  any  advantages  accruing 
from  a  decline  up  to  date  (December,  1868)  in  the  price  of  breadstuff's, 
t  The  above  results  are  exhibited  specifically  in  the  following  table: 


Table  showing  the  average  increase  in  the  prices  of  some  of  the  leading  articles  of  domestic  consumption , 
and  in  house  rent  in  1867,  as  compared  with  1860-61,  in  the  manufacturing  towns  of  the  United  States, 


Articles. 

Per  ct.  increase 
of  1867  over 
1860. 

- - - y - 

Remarks. 

Flour  and  other  breadstuffs . 

■  ■  92 

Apparent  average  increase  in  price  of  provisions,  88  per  cent. 
True  average  increase,  86  per  cent. 

Average  increase  in  price  of  fuel,  57  per  cent. 

Average  increase  in  price  of  domestic  cotton  goods  and  clothing, 

86  per  cent.  . 

Average  increase  in  house-rent,  65  per  cent. 

Average  increase  in  price  of  board,  76%  per  cent. 

General  average  increase  in  cost  of  provisions,  clothing,  rent,  &c., 
to  men  with  families,  75  per  cent. 

Increase  in  cost  of  clothing,  board,  &c.,  to  men  not  keeping  house, 
73  per  cent. 

Meats — fresh  and  salted . 

66 

Butter . . . 

•  91* 

74 

Fish — dry  and  pickled . .- 

Potatoes  and  other  vegetables . . 

79 

Beans . . 

92 

Sugar  and  Molasses . 

88 

Tea . . 

99 

Coffee . . 

117 

Milk . 

61 K 

67 

Fuel — coal,  wood,  &c . . . 

Domestic  potton  goods . 

98 

Clothing.  . . 

75 

House-rent . . . . . 

65 

71 

Board  for  mp.r»  .... 

Board  for  women . 

81 % 

13 


Average  aggregate  weekly  earnings  in  1867  of  families. 


Size  of  Families. 

Average  weekly 

expenditures 

for  provisions, 

house-rent,  &c. 

Average  weekly 

earnings. 

Surplus  for  cloth¬ 

ing,  housekeep¬ 
ing,  goods,  kc. 

Parents  and  one  child . 

$10  24 

8  35 

$17  00 

17  52 

$6  76 

9  17 

Three  adults . 

Parents  and  two  children . 

12  26 

18  75 

6  49 

Parents  and  three  children . 

“  15  02 

19  50 

4  48 

Parents  and  four  children . . . 

17  79 

23  33 

5  54 

Parents  and  five  children . 

15  23 

17  11 

1  88 

Parents  and  six  children . 

11  67 

13  50 

1  83 

Parents  and  seven  children . 

23  78 

25  00 

1  22 

General  average  of  the  above . 

$14  29 

18  96 

4  67 

In  order  to  obtain  the  data  for  further  com¬ 
parisons,  and  especially  to  determine  whether 
the  large  increase  in  wages  in  1867-68,  has 
brought  any  real  net  gain  to  the  employes  of 
manufacturing  establishments,  a  careful  investi¬ 
gation  was  instituted  in  respect  to  the  earnings 
and  expenditures  of  individuals  and  families  in 
1860,  similarly  situated  in  all  respects  with  those 
whose  average  aggregate  weekly  receipts  and 
expenditures  were  given  in  the  above  table  for 


1867;  and  in  so  doing  it  has  fortunately  hap¬ 
pened,  that  through  the  earnest  co-operation  of 
several  proprietors  or  agents  of  manufacturing 
establishments,  the  data  in  respect  to  1860  have 
been  obtained,  in  many  instances,  from  the  same 
specific  individuals  or  families  which  supplied 
the  information  relative  to  1867.  These  data, 
carefully  verified  by  reference  to  contemporary 
price-currents  and  other  evidence,  have  afforded 
the  means  of  constructing  the  following 


Table  showing  the  average  weekly  expenditure  of  families  of  varying  numbers  in  the  manufacturing 
towns  of  the  United  States  for  the  years  1860  and  1867,  respectively. 


Size  of  Families. 

Average  weekly 
wages. 

Average  weekly 
expenditures  for 
provis’ns,  house 
rent,  clothing,  &c. 

Surplus  in  1860. 

In  1867. 

In  I860. 

In  1867. 

In  1860. 

Parents  and  one  child . 

$17  00 

$12  17 

$17  00 

$9  96 

$2  21 

Three  adults . 

17  52 

12  00 

17  52 

10  31 

1  69 

Parents  and  two  children . . 

18  75 

11  50 

18  75 

10  79 

71 

Parents  and  throe  children . 

19  50 

12  41 

19  50 

11  33 

1  08 

Parents  and  four  children . 

23  33 

14  15 

23  33 

13  18 

97 

Parents  and  five  children . . . 

17  11 

10  37 

17  11 

9  46 

91 

Parents  and  six  children . 

13  50 

9  50 

13  50 

7  67 

1  83 

Parents  and  seven  children . 

25  00 

15  17 

25  00 

14  09 

1  08 

General  average  of  the  above . 

18  96 

12  16 

18  96 

10  85 

1  31 

In  constructing  the  above  table  it  has  been 
assumed  for  purposes  of  comparison,  (and  so  ex¬ 
pressed  in  the  third  column  of  the  table,)  that 
the  total  average  weekly  wages  obtained  in 
1867,  viz.:  $18  96,  were  entirely  expended,  and 
in  the  following  proportions :  $14  29  for  provis¬ 
ions,  rent,  fuel,  <fcc.,  and  the  balance,  $4  67,  for 
clothing,  domestic  dry  goods,  housekeeping 
articles,  luxuries,  <fcc.  Now  the  same  quantities 
and  qualities  of  provisions,  groceries,  clothing, 
rent,  fuel  and  housekeeping  articles,  could  have 
been  obtained  in  1860  and  1861  for  the  respec¬ 
tive  sums  indicated  in  the  fourth  column ;  show¬ 
ing  an  average  weekly  cost  of  $10  85  in  1860,  as 
compared  with  $18  96  in  1867 ;  and  leaving  a 
balance  in  the  former  year  of  $1  31  (gold)  per 
per  week  in  favor  of  the  operative,  as  against  no 


accruing  surplus  whatever  in  1867-8;  or,  in 
other  words,  supposing  the  requirements  for 
food,  clothing  and  shelter  to  have  been  the  same 
in  1867  as  in  1860,  the  operatives  referred  to  in 
the  table,  'who  received  in  1867  an  average  of 
$18  96  per  week,  obtained  in  that  year  only 
sufficient  to  give  them  the  actual  necessaries  and 
comforts  of  life;  while  the  same  men,  whose 
average  weekly  wages  in  1860-61  were  only 
$12  16,  obtained  with  such  earnings  at  that  time 
the  same  articles  of  comfort  or  necessity,  and 
had  in  addition  a  surplus  of  $1  31  (gold)  per 
week,  or  $68  12  (gold)  per  annum. 

As  already  stated,  it  has  been  assumed  in  this 
comparison  that  the  wages  received  by  the  op¬ 
eratives  in  question  during  the  year  1867  were 
wholly  consumed  in  their  living.  To  a  very 


14 


considerable  extent  it  has  been  found  that  this 
assumption  is  justified  by  facts ;  but  if,  in  view 
of  the  constant  increase  of  deposits  in  savings 
banks  and  other  evidences  of  accumulation,  it 
should  appear  that  a  margin  on  an  average  has 
been  saved,  the  figures  presented  show  with 
equal  certainty  that  on  the  same  scale  of  living, 
the  margin  in  1860  must  have  exceeded  that  of 
186*7  in  the  proportions  indicated.  The  fact, 
therefore,  is  established  by  incontrovertible 
evidence,  that  the  condition  of  working  men  and 
women  in  a  majority  of  the  manufacturing  towns 
of  the  United  States  is  not  as  good  at  the  present 
time  as  it  was  previous  to  the  war,  notwithstand¬ 
ing  that  their  wages  are  greater,  measured  in 
gold,  in  186*7-68  than  they  were  in  1860-61. 

It  should  also  be  noted  that  most  of  the  per¬ 
sons  whose  wages  and  expenditures  have  been 
discussed,  were  classed*  as  skilled  workmen,  re¬ 
ceiving  an  advance  in  wages  of  about  62  per 
cent,  in  1867,  as  compared  with  the  amount 
received  in  1860.  If  their  condition  has  not  im¬ 
proved,  the  condition  of  the  large  class  of  un¬ 
skilled  workmen,  such  as  day  laborers,  teamsters, 


watchmen,  and  the  like,  is  even  worse.  Thus  a 
careful  examination  and  comparison  of  a  large 
number  of  returns  from  the  proprietors  or  super¬ 
intendents  of  furnaces,  mills,  foundries  and  fac¬ 
tories  of  every  description  in  almost  all  sections 
of  the  United  States  establishes  the  fact,  that  the 
average  weekly  wages  of  laborers  and  other 
unskilled  workmen  for  the  years  1860-61  and 
1867-68,  respectively,  were  as  follows :  1860-61, 
$6  04  per  week;  1867-68,  $9  54. 

Assuming  now,  as  in  the  preceding  table,  that 
the  laborers  in  question  expended  their  entire 
•earnings  in  1867,  viz.:  $9  64,  the  same  neces¬ 
saries  and  comforts  could  have  been  obtained  in 
1860-61  by  an  expenditure  of  $5  62  per  week, 
leaving  an  available  surplus  of  52  cents  per 
week;  or,  in  other  words,  the  unskilled  work¬ 
men  of  the  country,  obtaining  the  mere  neces¬ 
saries,  and  none  of  the  luxuries  of  life,  were  in  a 
worse  condition  by  $27  a  year  in  1867,  with 
receipts  of  $9  54  per  week,  than  they  were  in 
1860-61,  with  receipts  of  $6  04  per  week.  The 
following  tables  illustrate  the  above  facts  more 
in  detail: 


Table  showing  the  average  weekly  expenditures  of  laboring  men  in  the  various  manufacturing  establish¬ 
ments  of  the  United  States  in  1860-61,  and  in  1867-,68,  respectively;  also,  their  average  wages 
in  those  periods. 


Articles. 


Flour  and  bread . . 

Meat  of  all  kinds . 

Butter . 

Sugar  and  molasses . 

Tea . 

Coffee . 

Soap,  starch,  &c . 

Lard . 

Milk . 

Eggs . 

Salt  and  spices . . . 

Potatoes  and  other  vegetables . 

Fruits,  fresh  and  dried . 

Coal,  wood,  &c . 

Oil,  or  other  light . 

Other  articles . 

House  rent . 

Clothing,  housekeeping  goods,  &c, 


Weekly  wages. , 
Excess  in  1861. 


1867-’8. 

1860-T. 

$1  40 

$0  74 

1  50 

81 

45 

24 

50 

27 

37 

19 

10 

05 

22 

14 

18 

12 

32 

20 

20 

12 

05 

03 

50 

29 

10 

07 

50 

32 

08 

10 

82 

51 

1  25 

75 

1  00 

57 

9  54 

5  52 

9  54 

6  04 

52 

Although  the  foregoing  data  and  conclusions, 
founded  as  they  are  upon  the  average  actual  ex¬ 
perience  of  a  large  number  of  mechanics  and 
laborers  in  different  sections  of  the  country, 
sufficiently  illustrate  the  increased  cost  of  living 
and  the  decreased  purchasing  power  of  money 
which  has  taken  place  since  the  commencement 
of  the  war  in  1861,  the  adoption  of  another 
standard  for  comparison,  viz. :  the  price  of  a 
barrel  of  flour,  also  affords  some  conclusions  of 
interest.  The  average  price  of  this  article  before 
the  war  is  known  to  have  measured  pretty  accu¬ 
rately,  throughout  the  country,  the  average 


weekly  wages  of  unskilled  day  laborers ;  and  in 
the  case  of  one  of  the  largest  corporations  in  the 
middle  States,  the  principle  was  specifically  es¬ 
tablished,  that  the  weekly  wages  of  commcto 
laborers  in  their  employ  should  always  be  made 
equal  to  the  varying  cost  of  one  barrel  of  flour 
per  week. 

Now  the  average  increase  in  the  price  of  .  a 
barrel  of  wheaten  flour  throughout  the  manufac¬ 
turing  States  has  been,  from  1860  to  July  1st, 
1868,  in  excess  of  90  per  cent. ;  while  the  in¬ 
crease  in  the  wages  of  laborers  and  operatives 
generally,  skilled  and  unskilled,  during  the  same 


*  The  skilled  workmen  whose  wages  advanced  62  per  cent.,  on  an  average,  from  1860  to  1867,  were  only  those 
whose  weekly  expenditures  are  given  in  the  above  table.  The  average  advance,  in  the  same  period,  in  the  wages 
of  all  the  skilled  workmen  reported,  was,  as  previously  stated,  about  60  per  cent. 


15 


period,  has  averaged  about  58  per  cent.  Meas¬ 
ured,  therefore,  by  the  flour  standard,  the  work¬ 
man  is  not  as  well  off  in  1867  as  he  was  in  1860, 
by  at  least  20  per  cent. ;  or,  to  state  the  case 
differently,  the  wages  which  in  1860  purchased 
one  and  a  half  barrel  of  flour  now  pay  for  about 
one  and  a  quarter  barrels. 

From  a  large  number  of  returns  made  to  the 
Commissioner,  the  following  are  selected  as  fur¬ 
ther  illustrating,  by  specific  examples,  the  above 
conclusions. 

Very  careful  and  exact  tables  prepared  at  one 
of  the  largest  iron  Works  in  Troy,  N.  Y.,  return 
the  price  of  the  flour  used  by  the  workmen,  and 
purchased  by  them  at  retail  in  close  proximity 
to  the  works,  at  $6  50  per  barrel  in  1860-61, 
and  at  $15  per  barrel  in  1867-68.  In  the  same 
establishment  the  weekly  earnings  of  the  ope¬ 
ratives  were  increased  during  the  same  time  as 
follows : 

Laborers,  $5  to  $8  50;  engineers,  $10  to  $15; 
shearmen,  $6  to  12  75;  puddlers,  $13  40  to 
$21  90;  general  average  advance  in  wages 
from  1860  to  1867-68,  69  per  cent. 

In  one  of  the  leading  machine  shops  at  Buf¬ 
falo,  New  York,  the  weekly  earnings  of  a 
portion  of  the  workmen,  in  1860  and  1867, 
computed  in  flour,  were  as  follows : 

In  1860.  In  1867. 
Riveters  and  boiler  makers. .  .1%  bbl.  1^  bbl. 

Best  machinists . 2  “  \%  “ 

Ordinary  machinists . 1%  “  “ 

Flangers .  .2  “  lif  “ 

In  an  establishment  for  the  manufacture  of 
agricultural  implements,  located  at  Brooklyn, 
N.  Y.,  the  weekly  earnings  of  the  largest  class 
of  operatives,  in  1860  and  1867,  also  computed 
in  flour,  were  as  follows;  Wood  workers,  in 
1860,  one  and  a  half  barrels;  in  1867,  one 
barrel. 

At  a  locomotive  establishment  in  Patterson, 
N.  J.,  the  weekly  wages  of  ordinary  machinists 
in  1860-61  were  $7  50;  and  were  about  75  cents 
in  excess  of  the  retail  barrel  of  flour.  In  the 
same  establishment  the  same  operatives  received 
in  1867-68  $13  50  per  week  for  the  same  labor; 
but  this  sum  then  lacked  $1  50  of  the  price  suf¬ 
ficient  to  purchase  a  barrel  of  flour  in  the  same 
locality. 

Cotton  Mills  of  New  England. — Price  of  flour 
used  by  operatives:  1860,  $7  25;  1868,  $14  12; 
increase,  94.7  per  cent. 

Wages. — Fly-frame  tenders — female  adults 
working  by  the  piece,  1860,  67  Ants  per  day; 
1868,  $1  per  day;  increase,  50  per  cent.  Male 
spinners — male  adults  working  by  the  piece, 
1850,  $1  18  to  $1  25  per  day;  1868,  $1  92  to 
$2  per  day;  increase,  61  per  cent. 

Board  paid  by  the  same  operatives. — Males, 
1860,  $2  25  per  week;  1868,  $3  75;  increase, 
66  per  cent.  Females,  1860,  $1  25  per  week; 
1868,  $2  ;  increase,  60  per  cent. 

These  illustrations,  from  the  data  in  the  pos¬ 
session  of  the  Commissioner,  might  be  greatly 
extended;  but  enough  of  evidence,  probably, 
has  been  adduced  to  prove;  that  whether  we 
adopt  money  or  flour  as  the  standard  for  the 
comparison  of  wages  and  commodities,  in  1860 


and  1867,  the  result  is  not  dissimilar;  viz:  the 
purchasing  power  of  the  irredeemable  paper 
money  now  in  use  is  not  nearly  equal  to  what 
it  was  in  the  immediate  ante-war  years  of  1860 
and  ’61 ;  and  that  the  working  men  and  women 
of  the  country  do  not  now  receive  as  much  in 
return  for  their  labor  as  before  the  war. 

The  discussion  of  this  subject,  which  has  been 
instituted  and  carried  on  for  the  Commissioner 
with  great  skill  and  industry  by  Edward  Young, 
Esq.,  of  the  Treasury  Department,  is  further 
continued  with  more  extended  tables  in  the  ap¬ 
pendix  to  this  report,  marked  D,  to  which 
reference  is  here  made.  And  in  respect  to  the 
statistics  as  thus  submitted,  both  in  the  text  and 
in  the  appendix,  the  Commissioner  would  add, 
that  if  the  prices  of  commodities  in  different 
sections  of  the  country  as  there  given  are  found 
(as  they  probably  may  be)  to  differ  somewhat 
from  the  commercial  price  currents  of  the 
period,  it  should  be  borne  in  mind  that  the 
former  represent  the  average  retail  prices  which 
careful  investigation  by  a  large  number  of  ob¬ 
servers  has  found  to  prevail  in  the  manufacturing 
towns  of  the  various  sections  of  the  country, 
while  the  latter,  on  the  other  hand,  represents 
either  wholesale  prices  or  prices  at  certain  mar¬ 
ket  centers.  In  fact,  the  large  difference  be¬ 
tween  the  prices  paid  by  operatives  and  laborers 
for  provisions  and  other  commodities  bought  in 
small  quantities  at  retail,  and  the  prices  of  the 
same  articles  as  obtainable  in  large  quantities  or 
at  wholesale,  has  constituted  a  marked  feature  of 
attention  in  all  these  investigations,  and  forcibly 
suggests  the  importance  of  inaugurating  mea¬ 
sures  whereby  so  large  a  proportion  of  the  avails 
of  the  most  productive  labor  of  the  country  may 
not  be  diverted  to  the  profit  of  those  whose 
business  is  that  of  merely  exchanging.  The 
remedy  for  this,  in  a  very  great  degree,  is  un 
doubtedly  to  be  found  in  the  principle  of  co-ope¬ 
ration,  not  as  applied  to  manufacturing  or 
producing,  but  to  agencies  with  established 
stores,  whose  simple  and  sole  object  should  be 
the  purchasing  and  supplying  of  commodities 
without  the  intervention  of  the  middle  man,  and 
at  the  minimum  of  cost.  A  personal  and  de¬ 
tailed  examination  of  the  management  and  work¬ 
ing  of  some  of  the  leading  and  most  successful 
co-operative  stores  in  Great  Britain  during  the 
summer  of  1867,  abundantly  satisfied  the  Com¬ 
missioner  of  their  utility  and  benefit  to  the 
employes  of  manufacturing  establishments ;  and 
apart  from  any  testimony  which  he  may  adduce, 
the  evidence  in  general  in  possession  of  the 
public  is  sufficient  to  prove  that  co-operation, 
at  least  to  the  extent  referred  to,  is  no  experi¬ 
ment.  The  subject  is  one  which  by  reason  of 
its  importance  commends  itself  alike  to  the  em¬ 
ployers  of  labor,  and  to  the  representatives  of 
those  who  are  employed,  inasmuch  as  it  offers  a 
plan  which  practically  amounts  to  increasing 
the  amount  paid  to  labor  without  increasing  the 
cost  of  product ;  and  for  removing,  in  no  small 
degree,  the  incentives  which  now  exist  for 
strikes,  and  the  consequent  waste  of  the  only 
commodity,  viz :  labor,  which  the  operative  has 
to  sell,  and  which,  moreover,  unless  sold  and 


16 


used  at  the  instant  required,  can  never  to  the 
same  extent  be  again  made  available. 

GENERAL  INFERENCES. 

Finally,  from  the  results  of  investigation 
which  have  thus  been  presented,  we  may  draw 
the  following  conclusions : 

The  aggregate  wealth  of  the  country  is  in¬ 
creasing,  probably,  as  rapidly  as  at  any  former 
period ;  yet  it  does  not  follow  that  there  is  the 
same  increase  in  general  prosperity.  The  la¬ 
borer,  especially  he  who  has  a  large  family  to 
support,  is  not  as  prosperous  as  he  was  in  1860. 
His  wages  have  not  increased  in  proprtion  to 
the  increase  in  the  cost  of  his  living.  There  is, 
therefore,  an  inequality  in  the  distribution  of 
our  annual  product,  which  me  must,  in  no  small 
degree,  refer  to  artificial  causes.  This  inequal¬ 
ity  exists  even  among  the  working  classes  them¬ 
selves.  The  single  man  or  woman,  working  for 
his  or  her  support  alone,  is  in  the  receipt  of  a 
rate  of  wages  from  which  savings  may  be  made 
equal,  or  greater  than  ever  before,  especially  in 
the  manufacturing  towns,  where  the  price  of 
board  is,  to  a  certain  extent,  regulated  artifi¬ 
cially  by  the  employer.  Unmarried  operatives, 
therefore,  gain ;  while  those  who  are  obliged  to 
support  their  own  families  in  hired  tenements 
lose.  Hence,  deposits  in  savings  banks  increase, 
while  marriage  is  discouraged ;  and  the  forced 
employment  of  young  children  is  made  almost  a 
necessity  in  order  that  the  family  may  live. 

Now  whence  comes  this  inequality,  and  this 
unnatural  distribution  of  the  results  of  labor  ? 
The  student  of  political  economy  would  predict 
a  priori  that  such  must  be  the  result  of  the 
enforced  use  of  a  fluctuating  measure  of  value, 
viz:  inconvertible  paper  money.  It  would  be 
predicted  a  priori  that  the  use  of  such  money 
involves  a  most  oppressive  tax,  which  falls 
heaviest  upon  the  laborer  and  lightest  upon  the 
owner  of  capital.  Antagonism  is  produced 
where  none  ought  to  exist;  the  capitalist  is 
forced  to  charge  an  additional  profit  for  the 
increased  risk  involved  in  the  use  of  a  false 
measure  of  value,  and  the  consumer  of  the  com¬ 
modity  is  forced  to  pay  for  such  risk.  There 
is  no  dishonesty  to  be  inferred,  and  no  injustice 
which  the  honest  capitalist  can  avoid,  so  long 
as  the  law  is  as  it  is ;  he  must  either  cover  all 
risks,  or  withdraw  his  capital  entirely  from  in¬ 
dustrial  enterprise. 

It  has  been  well  said  that  there  can  be  no  true 
theoretic  conclusion  which  will  not  be  proved 
by  the  facts  whenever  the  theory  can  be  applied. 
We  have  given  the  theory  of  the  effects  of  incon¬ 
vertible  paper  money,  and  we  find  that  the  facts 
prove  it.  The  rich  become  richer  and  the  poor 
poorer. 

In  addition,  however,  to  an  inconvertible 
paper  currency,  there  are  other  agencies  which 
are  powerfully  operating  to  the  production  of  a 
like  result ;  and  the  consideration  of  these  brings 
us  to  a  new  department  of  our  investigation, 
viz. :  The  influence  of  taxation,  direct  and  indi¬ 
rect,  upon  the  cost  of  domestic  production,  and 
consequently  upon  the  ability  of  the  country  to 
exchange  with  foreign  nations  upon  terms  of 


equality.  Taxation  as  it  exists  in  the  United 
States  may  be  classified  under  three  heads : 

1st.  Taxation  under  the  internal  revenue. 

2d.  Taxation  under  the  tariff. 

3d.  State  and  local  taxation. 

We  propose  to  examine,  in  the  order  enumer¬ 
ated,  the  present  influence  of  each  of  these  forms 
of  taxation  upon  the  cost  of  production  and  upon 
national  development. 

1. - NATIONAL  TAXATION  UNDER  THE  INTERNAL 

REVENUE. 

At  the  close  of  the  war,  taxation  under  the 
system  of  internal  revenue  had  been  extended, 
through  the  necessities  of  the  Government,  to  a 
degree  which  probably  finds  no  parallel  in  any 
recent  history ;  and  with  the  exception  of  land 
and  the  direct  products  of  agriculture — other 
than  cotton  and  sugar — had  been  made,  so  far  as 
domestic  production  was  concerned,  all  but  uni¬ 
versal.  In  the  case  of  manufactured  products, 
furthermore,  the  system  had  been  made  to  em¬ 
brace  not  only  the  finished  and  marketable 
product,  but  very  generally  also  every  consti¬ 
tuent  which  entered  into  the  composition  of  such 
product.  But  burdensome  and  complicated  as 
the  system  was,  its  inception  and  organization 
must  be  regarded  as  one  of  the  wisest  and  most 
successful  measures  of  the  war ;  and  it  is  only  to 
be  regretted  that  recourse  was  not  earlier  had 
to  so  effectual  a  method  of  raising  revenue, 
rather  than  to  the  expedients  at  first  exclusively 
resorted  to,  of  loans  at  a  heavy  discount  and  an 
irredeemable  paper  money.  How  successful  the 
system  as  a  means  of  raising  revenue  has  proved 
is  made  clearly  evident  from  the  revenue  actually 
collected,  which,  from  the  inauguration  of  the 
system  in  1863  to  the  30th  of  June,  has  amounted 
to  over  eleven  hundred  ‘millions  of  dollars.  So 
long,  moreover,  as  the  war  continued  and  the 
demand  for  manufactured  products — owing  to 
the  enormous  consumption  of  the  army  and  the 
withdrawal  of  labor  from  its  accustomed  avoca¬ 
tions— was  fully  equal  to,  or  in  excess  of  supply, 
so  long  as  taxation  under  the  internal  revenue 
was  not  regarded,  at  least  by  the  majority  of 
producers,  as  at  all  oppressive  ;  but,  on  the  con¬ 
trary,  by  reckoning  taxation  in  common  with 
labor  and  material  as  an  element  of  cost,  and 
profit  as  a  per  centum  on  the  whole,  it  was  very 
generally  the  case  that  the  aggregate  profit  of 
the  producer  was  actually  enhanced,  by  reason 
of  his  taxes,  to  an  extent  considerably  greater 
than  it  would  fcave  been  had  no  taxes  whatever 
been  imposed. 

The  close  of  the  war,  however,  soon  demon¬ 
strated  the  truth  of  the  economic  maxim,  that 
the  productiveness  of  a  system  of  taxation  is  not 
its  first  or  most  important  consideration.  The 
condition  of  affairs  before  described  was  re¬ 
versed  ;  the  supply  of  manufactured  products 
became  equal  to  or  exceeded  demand ;  products 
fell  faster  than  either  labor  or  material,  and  tax¬ 
ation,  which  formerly  had  been  paid  wholly  from 
profit,  now  fell  mainly  upon  capital.  Apart  from 
this  it  was  evident,  that  a  system  which  violated 
every  acknowledged  principle  of  taxation ;  which, 
instead  of  being  concentrated,  was  diffused; 


17 


which  brought  with  it  constant  official  inquisi¬ 
tions  and  intrusions  ;  which  hourly  provoked  to 
concealment,  evasion,  and  falsehood  ;  which,  by 
duplications  and  enhancement  of  profits,  took 
far  more  from  the  pocket  of  the  people  than  was 
ever  received  into  the  treasury,  could  not  exist 
much  longer  among  a  free  people  than  the  neces¬ 
sity  which  called  it  into  existence.  Accordingly 
as  the  requirements  for  expenditure  growing  out 
of  the  war  and  the  existence  of  debt  have  dimin¬ 
ished,  the  system  of  internal  revenue  has  been 
extensively  and  rapidly  modified.  Within  the 
last  three  years  all  taxes  which  discriminated 
against  prudence  and  economy — as  the  taxes  up¬ 
on  repairs ;  against  knowledge,  as  the  taxes  up¬ 
on  books,  paper,  and  printing ;  against  capital 
and  thrift,  as  the  differential  income  tax ;  against 
the  transportation  of  freights  by  boats  or  vehi¬ 
cles,  and  against  the  great  leading  raw  materi¬ 
als,  as  coal  and  pig  iron,  cotton,  sugar,  and  pe¬ 
troleum — have  been  swept  from  the  statute  book. 
No  direct  taxes,  moreover,  are  now  imposed  up¬ 
on  any  manufactured  product,  with  the  exception 
of  distilled  spirits,  fermented  liquors,  tobacco, 
gas,  patent  medicines,  perfumery,  cosmetics,  and 
playing-cards,  all  of  which  may  be  regarded  in 
the  light  of  luxuries,  and  as  involving,  in  the 
main,  an  entirely  voluntary  assessment  on  the 
part  of  consumers. 

These  reforms,  although  they  have  necessitat¬ 
ed  a  relinquishment  of  at  least  $170,000,000  of 
annual  revenue,  have,  it  is  believed,  brought 
nothing  of  permanent  detriment  to  the  national 
exchequer ;  for  that  this  great  relief  from  taxa¬ 
tion  has  both  stimulated  and  strengthened  the 
productive  interests  of  the  country  cannot  be 
doubted ;  and  if  so,  then  the  period  within  which 
the  national  debt  can  be  discharged  has  been 
accelerated  rather  than  protracted,  inasmuch  as 
it  can  be  demonstrated  that  the  power  of  con¬ 
tributing  to  the  public  revenue  increases  geo¬ 
metrically  as  the  activity  of  production  and  cir¬ 
culation  increases  arithmetically. 

As  thus  amended,  and  as  it  now  stands,  the 
internal  revenue  system  of  the  United  States  ap¬ 
proximates  closely  to  that  which  the  experience 
of  more  than  three-quarters  of  a  century  in  Great 
Britain  has  shown  to  be  capable  of  yielding  the 
maximum  of  revenue  with  the  minimum  of  dis¬ 
turbance  to  the  wealth-producing  elements  of  the 
country.  The  changes,  apart  from  those  pertain, 
ing  to  administration,  which  are  required  to  still 
further  perfect  the  system,  are  not  numerous, 
and  with  the  termination  of  the  large  payments 
for  the  equalization  of  bounties,  and  with  an  eco¬ 
nomical  administration  of  the  government,  can, 
undoubtedly,  be  made  with  safety  at  no  distant 
period.  They  should  unquestionably  embrace 
the  taxes  now  levied  upon  telegraph  and  express 
^companies  ;  upon  the  gross  receipts  of  railroads, 
steamboats,  and  other  common  carriers  for  the 
transportation  of  passengers ;  and  the  percent¬ 
age  taxes  on  the  sales  of  merchandise  ;  the  gross 
receipts  from  all  of  which  is  less  than  one-half 
the  annual  expenditures  during  the  last  two  fis¬ 


cal  years  for  the  equalization  of  bounties.  When 
this  has  been  accomplished,  it  may  with  truth 
be  claimed  that  the  entire  internal  revenue  sys 
tern  has  been  made  wholly  subordinate  to  the 
more  important  end  of  creating  national  wealth ; 
and  that  under  it  no  direct  obstacle  whatever  is 
imposed  by  the  government,  which  can  prevent 
the  domestic  producer  from  placing  his  product 
upon  the  market  at  the  lowest  possible  cost. 

In  concluding  this  review  of  the  present  influ¬ 
ence  and  condition  of  the  national  taxation  un¬ 
der  the  internal  revenue,  the  Commissioner  is 
constrained  to  confess,  that  thus  far  the  abate¬ 
ment  of  prices  consequent  upon  the  large  annual 
reduction  of  taxes  has  not  been  what  was  antici¬ 
pated,  or  what  the  large  amount  of  revenue 
abandoned  would  seem  to  have  warranted.  In 
the  case  of  not  a  few  articles,  as  pig  iron,  manu¬ 
factured  lumber,  and  salt,*  the  prices  since  the 
removal  of  taxation  have  actually  advanced, 
while  in  other  instances,  as  in  the  case  of  agri¬ 
cultural  implements,  sewing  machines,  hoop 
skirts,  manufactures  of  silk,  newspapers,  and 
in  fact  most  articles  which  are  the  products  of 
monopolies  created  by  patents,  established  cus¬ 
tom,  or  other  circumstances,  the  repeal  of  the 
internal  tax,  through  the  maintenance  of  former 
prices,  has  been  only  equivalent  to  legislating  a 
bounty  into  the  pockets  of  the  producer. 

2. - NATIONAL  TAXATION  UNDER  THE  TARIFF. 

We  come  next  to  the  consideration  of  the  in¬ 
fluence  of  national  taxation  under  the  tariff  on 
prices  and  the  cost  of  domestic  production — a 
subject,  the  discussion  of  which  is  attended  with 
the  embarrassment  that  it  involves  more  of  pre¬ 
judice  and  of  opinion  founded  on  private  self-in¬ 
terest  than  almost  any  other,  which,  since  the 
abolition  of  slavery,  has  occupied  the  attention 
of  the  American  people.  Notwithstanding  this, 
it  is  important  to  recognize  the  fact,  that  under 
the  existing  financial  condition  of  the  country, 
the  old-time  issues  between  the  advocates  of  free 
trade  on  the  one  hand,  and  protection  on  the 
other,  have  ceased  to  be  of  any  real  practical 
importance — inasmuch  as  in  the  arrangement  of 
a  tariff  with  a  view  to  revenue,  the  requirements 
of  the  government  must  certainly,  for  the  present, 
necessitate  so  high  an  average  of  duties  as  to 
afford  all  that  can  be  reasonably  asked  for  on  the 
grounds  of  protection ;  and  with  a  given  require¬ 
ment,  moreover,  for  revenue,  in  excess  of  what 
can  be  derived  from  the  taxation  under  the  tariff 
of  acknowledged  luxuries,  there  would  seem  to 
be  no  valid  objection  to  distributing  the  addi¬ 
tional  taxation  in  such  a  manner  as  to  favor  those 
branches  of  industry  most  exposed  to  foreign 
competition. 

RECOGNITION  OF  THE  PROTECTIVE  SYSTEM  IN 
EUROPE. 

Again,  a  careful  study  of  the  financial  systems 
of  the  various  commercial  nations  of  Europe  has 
led  the  Commissioner  unhesitatingly  to  the  con- 


,  *  statistics  of  the  Chicago  Board  of  Trade  show  that  the  average  price  of  domestic  coarse  salt  per  barrel  in 
tne  Chicago  market  during  the  year  1865 — ’G6,  when  the  manufacture  of  this  article  was  subjected  to  a  heavy  inter¬ 
nal  revenue  tax,  was  $2  44;  while  for  the  year  1867 — ’68,  when  no  tax  was  imposed,  the  price  was  $2  73  per  barrel. 


18 


elusion — that  whatever  may  be  the  state  of 
European  public  opinion  in  respect  to  free  trade, 
and  whatever  may  be  the  claims  preferred  for  it 
on  the  broad  grounds  of  liberality  and  humani- 
tarianism,  the  fiscal  legislation  of  Great  Britain, 
France,  Germany,  Belgium,  Holland,  Austria  and 
Russia  is  now,  and  always  has  been,  framed 
solely  and  exclusively  with  reference  to  one 
object,  viz.,  the  promotion  of  supposed  national 
self-interest,  and  has  never  had  the  slightest  re¬ 
gard  to  the  interest  of  any  other  nation,  or  to  any 
arguments  other  than  those  based  upon  specific 
national  wants  and  specific  national  experiences. 

Thus,  the  policy  of  Great  Britain,  which  ex¬ 
empts  capital  employed  in  manufacturing  and 
banking  from  all  direct  taxation  under  the  excise, 
and  all  Yaw  materials  imported  from  foreign 
countries  from  all  taxation  under  the  customs, 
although  not  so  termed,  is  undoubtedly  protection 
in  its  most  subtile  and  effective  form,  and  as  such 
has  been  recognized  and  commented  on  by  the 
French  economists;  inasmuch  as  it  permits  the 
British  manufacturer  to  apply  the  largest  amount 
of  home  labor  to  the  smallest  value  of  raw 
material  under  such  conditions  as  enable  him  to 
“place  his  finished  product  in  all  foreign  markets 
at  the  lowest  possible  cost.  Any  other  policy 
than  free  trade  at  present  in  Great  Britain, 
would,  by  enhancing  the  cost  of  food  and  raw 
material,  inevitably  swell  the  cost  of  manufac¬ 
turing,  and  thus  result  to  the  direct  benefit  of 
the  foreign  competitor. 

The  above  observation  also  holds  true  in 
respect  to  the  unquestionably  inhuman  policy  of 
Belgium,  which  refuses  to  restrict  the  labor  of 
■women  and  children  in  its  coal  mines  and  iron¬ 
works,  for  the  openly  admitted  reason  that  such 
restriction  by  diminishing  the  supply  and  en¬ 
hancing  the  cost  of  labor  would  expose  too  se¬ 
riously  its  manufactures  to  British  and  other 
competition. 

If  we  turn  next  to  France,  we  shall  find  that 
protection,  besides  being  recognized  as  a  princi¬ 
ple  in  the  determination  of  taxes  on  imports, 
manifests  itself  even  more  conspicuously  in  other 
forms;  as,  for  example,  in  the  regulation  by 
government  of  railroad  freights  on  coal  and  iron, 
and  in  the  obstacles  which  are  officially  placed 
in  the  way  of  operatives  changing  their  employ¬ 
ment  'without  the  consent  of  their  employers. 

In  the  new  tariff  of  the  Zollverein  (June,  1868), 
although  its  rearrangement  on  a  very  low  per¬ 
centage  of  duties  is  claimed  as  a  triumph  of  free 
trade,  it  is  to  be  noted  that  especial  care  has  been 
laken  to  largely  and  progressively  increase  the 
rates  on  the  importation  of  all  articles  the  domes¬ 
tic  manufacture  of  which  it  is  considered  by 
Prussia  as  desirable  to  promote  and  foster.* 

Now,  if  these  premises  are  correct,  it  is  evident 
that  however  much  regard  may  be  professed  by 
the  nations  referred  to  for  philosophic  theory, 
their  fiscal  legislation  is  essentially  framed  in 
accordance  with  what  seems  to  them  to  be  the 


dictates  of  self-interest;  and,  in  fact,  it  may  well 
be  doubted  whether  in  modern  times  any  finan¬ 
cial  legislation,  even  under  its  most  favorable 
conditions,  can  or  ought  to  recognize  any  other 
principle  than  that  of  enlightened  selfishness. 
Such  selfishness,  however,  does  not  necessarily 
imply  illiberality ;  for  experience  in  both  public 
and  private  transactions  sufficiently  proves,  that 
exchanges  are  likely  to  be  the  most  extended 
and  most  profitable  when  a  mutuality  of  interest 
between  the  parties  concerned  is  fairly  regarded. 

Furthermore,  while  it  is  undoubtedly  true  that 
the  leading  commercial  nations  of  Europe  do 
foster  certain  branches  of  industry  and  commerce 
and  may  be  said  to  protect  them,  the  method 
adopted  is  entirely  different  from  what  we  call 
protection  in  the  United  States.  The  method  of 
England,  especially,  is  to  remove  burdens,  to 
cheapen  cost,  and  reduce  prices.  Our  method, 
on  the  contrary,  is  to  levy  a  tax,  thereby  increas¬ 
ing  cost  and  reducing  consumption.  The  one 
method  may  be  called  a  bounty  to  the  consumer, 
the  other  a  bounty  to  the  producer;  one  the 
method  of  abundance,  the  other  of  scarcity  or 
privation ;  and  as  our  main  difficulty  at  present 
is  excessive  cost  and  high  prices,  wre  should  do 
well  to  consider  this  difference  and  study  the 
lesson  which  it  teaches. 

A  TARIFF  IS  A  TAX. 

In  entering  upon  the  proposed  analysis,  it  is 
important  that  one  fact  in  the  nature  of  an 
axiom,  but  too  often  overlooked  in  the  discus¬ 
sion  of  this  subject  in  the  United  States,  should 
be  kept  clearly  in  view ;  and  that  is,  that  a  tariff 
on  imports  is,  under  all  circumstances,  a  tax, 
which  is  paid,  wholly  or  in  part,  by  the  consu¬ 
mer.  If  the  tariff  be  imposed  solely  for  revenue, 
then  the  consideration  of  most  importance  in 
connection  with  it  is  one  mainly  of  comparison, 
viz.,  to  determine  whether  the  tax  in  question  is 
superior  or  inferior  to  other  taxes  in  respect  to 
economy  of  administration,  equality  of  assess¬ 
ment,  and  productiveness  of  collection.  To  this 
theoretical  economists  would  undoubtedly  return 
a  negative  answer;  and  would  support  their 
conclusions  by  the  experience  of  the  densely 
populated  manufacturing  nations  of  the  Old 
World,  where  the  inhabited  area  is  limited,  the 
distribution  of  wealth  most  unequal,  and  law, 
through  the  maintenance  of  the  police  and  stand¬ 
ing  army,  not  easily  evaded.  In  the  United 
States,  on  the  contrary,  where  the  area  is  con¬ 
tinental,  the  population  sparse,  wealth  more 
equally  distributed,  and  the  carrying  out  of  laws 
is  made  dependent  on  public  opinion  rather  than 
on  the  representatives  of  force,  all  experience 
tends  to  establish  the  fact  that,  objectionable  as 
may  be  in  many  respects  a  high  tariff,  we  have 
thus  far  been  able  to  devise  no  other  sj^stem  of 
taxation  which  brings  to  itself  so  much  of  cer¬ 
tainty  in  its  results  and  equality  in  its  appor¬ 
tionments.  An  illustration  of  this  is  afforded  in 


*  Raw  materials  are  admitted  free,  or  nearly  so ;  and  the  rates  of  duty  rise  from  this  point  towards  the  maximum, 
(10  per  cent.,)  according  to  the  degree  and  fineness  of  manufacture.  For  instance,  cotton  carded,  combed,  or 
colored,  is  free  ;  wadding,  1  thaler  15  silver  groschen  per  hundredweight;  cotton  yarn,  one  and  two  threads,  2 
thalers  per  hundred  weight;  the  same,  bleached  or  colored,  4  thalers  per  hundred  weight;  the  same,  three  or  more 
threads,  6  thalers  por  hundred  weight.  Again,  wooden  ships  or  boats  are  charged  5  per  cent.,  but  iron  ships  or 
boats  8  per  cent. 


19 


the  case  of  the  customs  duties  upon  the  three 
articles  of  tea,  sugar,  and  coffee,  which  at  pres¬ 
ent  approximate  to  an  aggregate  of  about  fifty 
millions  of  dollars  per  annum.  These  duties  are 
assessed  mainly  at  five  or  six  ports  of  the  coun¬ 
try,  and,  being  wholly  specific,  are  collected 
without  delay  and  with  little  trouble.  It  it  not 
probable,  moreover,  that  the  revenue  derived 
from  them  is  evaded  to  any  great  extent  through 
smuggling,  while  under- valuation  is  practi¬ 
cally  impossible.  Being,  furthermore,  of  almost 
universal  consumption,  the  duties  levied  on  them 
are  very  uniformly  distributed,  and  fall  upon 
the  consumer  in  small  amounts  at  any  one  time ; 
while,  as  they  cannot  be  considered  as  necessa¬ 
ries  of  life  in  a  sense  so  absolute  as  breadstuff's 
and  clothing,  the  payment  of  the  tax  through 
their  use  is  in  a  great  measure  voluntary. 
Through  these  circumstances,  therefore,  the  con¬ 
ditions  of  effectiveness,  economy,  and  equality, 
as  regards  collection  and  apportionment,  are 
most  perfectly  secured.* 

Let  us  next  consider  the  conditions  of  raising 
an  equivalent  sum  from  internal  taxation  levied 
on  the  products  of  domestic  industry.  We  se¬ 
lect  iron  and  its  manufacturers,  boots  and  shoes, 
clothing,  cotton  and  woollen  fabrics  in  illustra¬ 
tion,  for  the  reason  that  these  articles  yielded 
by  internal  taxation  during  the  fiscal  year  1866 
an  amount  very  nearly  equivalent  to  what  is 
now  obtained  from  the  duties  on  tea,  sugar  and 
coffee.  It  must  be  obvious,  in  the  first  place, 
that  the  collection  of  this  amount  of  revenue 
from  the  above  enumerated  domestic  products 
must  be  an  exceedingly  complicated  matter.  In 
the  place  of  five  points  of  collection,  the  collect- 
tion  districts  would  extend  over  every  furnace, 
rolling  mill,  foundry,  machine  shop,  and  over 
every  cotton,  woollen,  and  hardware  manufac¬ 
tory,  and  over  every  factory  or  shop  for  the 
production  of  clothing,  boots  and  shoes  in  the 
country,  thus  entailing  an  additional  proportion¬ 
ate  increase  of  expense  and  official  inquisition. 

Again:  as  iron,  cotton,  and  woollen  fabrics 
are  the  direct  and  essential  component  elements 
of  a  great  variety  of  other  products,  the  taxa¬ 
tion  which  enhances  their  prices  as  raw  materi¬ 
als  in  the  first  instances  necessarily  multiplies 
the  price  of  all  articles  produced  by  their  agency, 
thus  restricting  consumption  and  the  extension 


of  foreign  commerce,  and  unfairly  exposing  great 
branches  of  domestic  industry  to  a  competition 
with  foreign  producers  who  are  free  from  similar 
disabilities. 

An  another  illustration  of  the  superiority  of 
the  tariff  as  a  means  of  raising  revenue  may  be 
found  in  the  acknowledged  failure  to  collect  a 
large  proportion  of  the  taxes  assessed  under  the 
internal  revenue,  and  in  the  great  inequality 
which  is  known  to  exist  in  the  distribution  of 
the  income  tax ;  the  amount  which  passed  to  the 
credit  of  this  latter  tax  in  a  single  district  of  the 
State  of  New  York  for  the  fiscal  year  1867 
having  been  more  than  double  the  collections 
under  the  same  head  in  the  same  year  from  ten 
entire  States  of  the  Union.* 

Following  what  appears  to  be  a  logical  order, 
the  Commissioner  would  next  ask  attention  to 
two  other  points  which  have  been  made  the  sub¬ 
ject  of  investigation,  namely,  the  direct  effect  of 
the  tariff  on  the  prices  of  imports  ;  and  the  effect 
of  the  increase  of  tariff  in  checking  importations. 

DISTRIBUTION  OF  TAXATION  UNDER  THE  TARIFF. 

In  respect  to  the  first  point,  namely,  the  direct 
effect  of  the  tariff  on  the  prices  of  imports,  the 
influence  is  undoubtedly  the  same  as  is  recog¬ 
nized  in  the  case  of  the  taxes  imposed  under  the 
internal  revenue.  If  the  demand  be  constant 
and  nearly  equal  to  the  supply,  the  consumer, 
through,  the  enhancement  of  price,  invariably 
pays  the  entire  duty,  and  generally  some  small 
additional  percentage  in  compensation  to  the 
importer  for  the  advances  made  by  him  on  ac¬ 
count  of  the  duties,  or,  as  at  the  present  time, 
in  the  way  of  insurance  against  fluctuations  in 
the  value  of  the  currency.  On  the  other  hand, 
in  case  the  supply  of  the  imported  article  tends 
to  exceed  the  demand,  (especially  if  demand  is 
checked  by  reason  of  an  enhancement  of  price 
resulting  from  an  increase  of  tariff,)  the  importer 
will  often  abate  prices  in  order  to  retain  his 
market ;  the  practical  effect  of  which  is,  that 
the  payment  of  the  duties  is  divided  more  or 
less  unequally  between  the  importer  and  the 
consumer.  If  the  profit  on  the  imported  article 
is  not  sufficient  to  allow  of  such  abatements  of 
price,  and  the  consumer  refuses  to  pay  an  in¬ 
crease  sufficient  wholly  to  compensate  for  the 
duties,  the  importation  ceases,  or  the  products 


*  In  illustration  of  this  point  tho  following  statistics  of  the  annual  consumption  of  tea,  coffee  and  sugar,  in 
the  United  States  are  presented  ; 


Article. 

Average  receipts 
from  duty  per 
annum. 

Average  annual 
consumption 
per  capita. 

Average  annual 
consumption 
by  each  con¬ 
sumer. 

Amount  of  duty  or  tax. 

Per  year. 

Per  week. 

Tea . 

$8,300,000 

1  pound. 

2.08  pounds. 

52  cents. 

1  cent. 

Coffee . 

8,000,000 

4.8  pounds. 

15  pounds. 

75  cents. 

IK  cent,  (nearly) 

Sugar . 

30,000,000 

26  pounds. 

26  pounds. 

78  cents. 

IK  cent. 

Pepper . 

64,750 

2  ounces. 

4  ounces. 

3%  cents. 

.072  cent. 

$46,364,750 

4  cents. 

From  the  above  table  it  will  be  seen  that  a  sum  in  gold  is  annually  received  into  the-treasury  from  the  abovo 
few  articles  sufficient  to  pay  the  interest  on  $740,000,000  of  the  national  debt,  and  at  a  cost  of  four  cents  per  week  to 
each  consumer  ;  a  tax  which  practically  must  be  unfelt  by  even  the  most  indigent  of  our  population. 


20 


are  entered  with  the  avowed  intention  of  being 
sacrificed. 

A  few  examples  in  illustration  of  these  princi¬ 
ples  may  be  given.  Thus,  in  the  case  of  the 
article  of  tea,  in  respect  to  which  the  demand 
is  almost  always  equal  to  the  supply,  the  price 
since  1861  has  increased  to  fully  the  extent  of 
duties  imposed  since  that  period ;  the  average 
wholesale  price  of  a  particular  variety,  having 
increased  from  68  cents,  gold,  per  pound,  to 
SI  35,  currency,  in  1867.  This  increase  has 
been  made  up  as  follows:  importing  costs  68 
cents,  gold ;  duty,  25  cents,  gold — 93  cents,  gold, 
or  $1  30,  currency,  (adding  the  average  gold 
premium  for  the  year,  40  per  cent.,)  leaving  five 
cents,  currency,  as  additional  profit,  or,  as  cur¬ 
rency  insurance  to  the  importer.* 

Lumber  offers  another  example  of  an  article 
in  which,  owing  to  the  relation  of  supply  and 
demand,  the  duty  imposed  on  the  foreign  import 
is  undoubtedly  paid  wholly  by  the  domestic 
consumer. 

Fresh  and  dried  fruits,  fresh,  dried,  and  salted 
fish,  and  many  fancy  articles,  especially  of  Ger¬ 


man  and  French  manufacture,  are  examples  of 
importations  on  which  the  duty  imposed  is  gen¬ 
erally  divided  between  the  importer  and  consu¬ 
mer.  It  is  also  a  noticeable  fact  that  the  wool 
tariff  of  1867,  by  checking  the  importation  of 
some  varieties  of  wools  and  woollens,  so  increased 
the  stocks  of  the  same  in  foreign  markets,  that 
prices  receded  to  an  extent  nearly  or  quite 
equivalent  to  the  increase  of  duties. 

Some  forms  of  bar-iron,  and  of  liquors,  cigars, 
oats,  butter,  potatoes,  cattle  on  the  hoof,  and  fine 
wools,  are  examples  of  articles  on  which  duties 
are  imposed  under  the  present  tariff  sufficient 
wholly  or  in  a  great  degree  to  check  importa¬ 
tions,  f 

The  general  conclusion  therefore  of  this  in¬ 
vestigation  is,  that  while  the  imposition  or  in¬ 
crease  of  taxation  under  the  tariff  always  occa¬ 
sions  an  increase  in  the  price  of  imported  articles 
to  the  consumer,  it  cannot  be  affirmed  that  such 
is  always  commensurate  with  the  duties  imposed, 
or  that  the  duty  is  always  wholly  paid  by  the 
consumer.:):  On  the  other  hand  it  not  unfre- 
quently  happens,  as  will  hereafter  be  shown, 


*  The  experience  of  Great  Britain  for  the  last  20  years,  in  respect  to  tea,  as  a  source  of  revenue  under  the 
customs,  has  established  this  curious  fact,  viz ;  that  a  decrease  of  the  tariff  on  this  article  brings  no  corresponding 
benefit  in  the  way  of  reduction  of  price  to  the  consumer.  Thus,  for  example,  while  the  duty  on  tea,  Tinder  the 
British  tariff,  was  reduced  to  the  extent  of  77  per  cent,  between  the  years  1849  and  1866,  (from  2s.  2 %d.  in  1849  to 
6d.  in  1866,)  the  average  price  of  tea  “in  bond,”  or  duty  free,  during  the  same  period  exhibited  a  corresponding 
increase  of  about  50  per  cent.,  (i.  e.  from  Is.  Id.  to  Is.  7 %d.,)  and  this,  too,  notwithstanding  the  fact  that  the  supply, 
through  importation,  had  no  way  abated,  but,  on  the  contrary,  increased  during  the  years  1862-’63  to  an  extent 
sufficient  to  overstock  the  market.  The  explanation  of  this  commercial  phenomena  is,  that  as  there  is  practically 
but  one  tea-producing  country,  the  trade  partakes  of  the  character  of  the  monopoly  to  such  a  degree  that  a 
decrease  of  the  duty  enures  mainly  to  the  advantage  of  the  producer,  and  an  increase,  conversely,  to  his  disadvan¬ 
tage.  The  opinion,  therefore,  so  often  expressed  of  late,  that  a  reduction  of  the  present  duty  on  tea  would  result 
in  advantage  to  the  American  consumer,’  is  not  likely  to  be  practically  realized. 

t  The  following  table  showing  the  prices  of  Turk’s  Island  salt,  in  gold,  from  1841  to  1862,  under  different  and 
widely  varying  conditions  of  tariff,  illustrates  the  difficulty  which  often  exists  of  tracing  any  defmito  or  constant 
connection  between  the  prices  of  the  imported  article  and  the  duties  that  may  be  imposed  upon  it : 

Prices  of  Turk's  Island  salt  in  New  York  and  rates  of  duty  thereon  from  1841,  when  it  ivas  free  of 
duty,  until  1862,  when  the  present  rate  of  eighteen  cents  per  hundred  pounds  was  imposed. 


Date. 


Average 
prices  ner 

bushel. 


Dates  and  rates  of  tariff  on  salt  in  bulk. 


CenfA. 


July  12,  1841 . 

December  20,  1841 . 

Jan.  24  to  Mar.  21,  1842. . 
April  11  to  July  6.  1842. . 

July  18,  1842 . . 

Oct.  7  and  Nov.  28,1842. . 

March  10,  1845 . 

January  12  to  19,  1846 _ 

Feb.  9  to  Mar.  16,  1846.. 
April  27  to  Dec.  21,  1846. 

March  15, 1847 . 

March  20,  1848 . 

Average  of  the  year  1855 . 
Average  of  the  year  1856. 

April  9,  1857 . 

May  14,  1857 . 

June  17,  1857 . 

July  4,  1861 . 

July  25  to  Aug.  15,  1861. . 

August  22,  1861 . 

July  9, 1862 . 

July  16, 1862 . 

October  1  to  11,  1862 . 


30i 
27 
25  a 
22 
25 
281 
24 
29 
45 
27 
33 
271 
33" 
32 


26 
25 
23 
20 
21  j 


Free. 

Free. 

August  30,  1842,  8  cents  per  bushel. 


August  6, 1846,  20  per  cent.,  (equal  to  about  21  cents  per  bushel./ 


March  3,  1857,  15  per  cent.,  (equal  to  about  1J  cent  per  bushel.) 


March  2,  1861,  4  cents  per  bushel. 
August  5,  1861,  12  cents  per  100  pounds. 


231 
29  \ 
30' 


July  14,  1862,  18  cents  per  100  pounds. 


321  to  341 


t  Nothing  can  be  more  unfair  than  the  practice  which  often  prevails  in  discussing  the  tariff,  of  comparing  tho 
prices  of  great  staple  articles  of  manufacture,  as  cotton  fabrics,  hosiery,  iron,  Bessemer  steel,  &c.,  at  different 
periods,  and  then  referring  the  decline  which  has  taken  place  in  their  market  values  to  the  influence  of  legislation. 
In  nine  cases  out  of  ten  the  slightest  examination  will  show  that  the  decline  in  question  was  due  to  what  may  be 
called  the  “  world’s  progress,”  i.  e.,  to  discoveries  in  mechanics  and  chemistry;  to  dimished  cost  and  greater 
supply  of  raw  material;  to  cheaper  and  quicker  methods  of  transportation  and  to  the  general  increase  and 
diffusion  of  human  knowledge;  and  that  this  progress  has  been  in  a  very  great  degree  independent  of  tho  United 
States,  and  would  have  taken  place  all  the  same  if  no  tariff  whatever  had  found  a  place  upon  the  statute  book  of 
the  country. 


21 


that  the  imposition  of  a  tax  in  the  form  of  a  tariff 
on  an  imported  article  is  made  the  occasion  for 
very  greatly  and  unnecessarily  advancing  the 
price  of  a  corresponding  domestic  product,  and 
thus  taxing  the  community  to  an  extent  entirely 
disproportionate  to  any  benefit  which  may  ac¬ 
crue  in  the  first  instance  to  the  national  revenue. 

INFLUENCE  OF  THE  TARIFF  IN  CHECKING  IMPORTA¬ 
TIONS. 

We  come  next  to  the  consideration  of  the  in¬ 
fluence  of  the  tariff  in  checking  importations  ; 
the  practical  interest  in  which  question,  at  the 
present  time,  centres  almost  entirely  in  the  fact, 
that  an  increase  of  the  existing  tariff  has  of  late 
been  persistently  urged  as  a  certain  remedy  for 
a  present  annual  import,  whose  aggregate  is  re¬ 
garded  as  excessive. 

That  the  imposition  or  increase  of  a  tariff 
does  contribute  specifically  to  diminish,  or  pro¬ 
hibit  importations  cannot  be  doubted ;  as,  to  use 
but  a  single  illustration,  the  experience  under 
the  increased  tariff  on  wool,  passed  March,  1867, 
sufficiently  demonstrates.  Thus,  the  net  import 
of  foreign  wool,  which  amounted  to  86,969,987 
pounds  in  1864,  and  67,065,386  in  1866,  declined 
to  29,475,698  in  1S67,  and  to  21,682,166  in 
1868.* 

But  whatever  may  be  the  force  of  specific  ex¬ 
amples,  it  is  equally  certain  that  a  consideration 
of  the  whole  subject  will  show  that  no  material 
reduction  of  importations — certainly  none  pro¬ 
portionate  to  the  means  employed — can  be  effect¬ 
ed  through  any  practicable  increase  of  the 
existing  tariff.  This  will  appear  evident  when 
we  reflect,  that  the  articles  which  constitute  a 
very  considerable  part  of  the  value  of  importa¬ 
tions  are  not  articles  of  strict  luxury,  which  can 
be  dispensed  with  at  will,  but  articles  whose 
consumption  the  people  will  not  relinquish  except 
upon  the  pressure  of  extreme  poverty  or  neces¬ 
sity  ;  or  others  which  are  absolutely  essential  to 
the  continuance  of  great  branches  of  domestic 
industry.  Thus,  for  example,  the  four  articles 
of  tea,  coffee,  sugar  and  molasses  constituted 
nearly  one-third  of  the  net  value  of  the  imports 
for  the  fiscal  year  1867-’68,  exclusive  of  bullion 
and  specie.  Their  consumption,  moreover,  is 
not  only  constantly  and  rapidly  increasing  with 
every  increase  of  wealth  and  population,  but  the 
whole  drift  of  popular  sentiment  is  unmistakably 
inclined  to  favor  a  much  larger  importation 
through  a  reduction  of  the  existing  tariff. 
Another  large  class  of  articles,  as  the  various 
dye-woods  and  dye  materials,  crude  India-rubber, 
soda-ash,  bleaching  powders,  guano,  lumber, 
sulphur,  hides  and  horns,  hatters’  furs,  ivory, 
raw  silk,  gums,  rags,  jute,  saltpetre,  tin,  &c., 
are  so  essentially  the  raw  materials  of  great 
branches  of  domestic  industry,  that  while  any 
interruption  of  their  importation  could  only  be 
attained  at  the  expense  of  national  decadence, 
an  increased  importation  would  infallibly  indi¬ 
cate  an  increase  of  .national  prosperity.  On 


these  two  classes  of  articles  alone,  the  increase 
in  the  value  of  imports  growing  out  of  perfectly 
legitimate  and  natural  causes,  will  probably  be 
sufficient  dui'ing  the  next  three  years,  to  fully 
counterbalance  any  reduction  in  the  value  of 
imports  which  might  be  effected  through  any 
changes  which  it  would  be  possible  to  make  in 
the  tariff  in  respect  to  all  other  articles  of  foreign 
growth  and  importation.  Thus,  for  example, 
the  increase  in  the  consumption  of  imported 
sugars  for  the  year  1868  is  reported  as  full  six¬ 
teen  per  cent,  above  the  consumption  of  the  pm- 
ceding  year,  while  for  the  year  1869  an  increase 
of  at  least  ten  per  cent,  is  anticipated.  Again, 
all  experience,  and  especially  the  experience  of 
the  United  States  within  the  last  three  years, 
shows  that  there  is  a  point  beyond  which  duties 
imposed  on  importations  cannot  be  carried 
without  rendering  them  practically  inoperative. 
Thus,  under  the  existing  tariff,  the  duties  on 
wines,  liquors,  and  silks  have  been  carried  to 
such  a  degree  that  only  so  much  of  these  articles 
are  now  imported  as  are  necessary  to  meet  a 
popular  requirement  that  no  law  can  prevent 
from  being  satisfied.  If  carried  beyond  this 
point,  the  requirement  or  necessity  will  still  be 
met,  but  the  smuggler  and  illicit  dealer,  rather 
than  the  regular  importer,  will  become  the  agent 
of  supply ;  for  in  no  country  can  evasion  of  the 
excise  or  customs  be  carried  out  more  success¬ 
fully  than  in  a  republic  where  popular  opinion 
is  both  the  law-maker  and  the  law-sustainer.  If 
proofs  in  support  of  this  position  are  demanded, 
they  are  most  abundant. 

W e  select  first  the  article  of  champagne,  the 
importation  of  which  in  accordance  with  popular 
demand  is  less  subject  to  fluctuation  than  almost 
any  other  article  of  foreign  growth  or  production. 
In  1864,  with  gold  at  from  200  to  250,  a3  com¬ 
pared  with  currency,  the  importation  was  103,- 
158  dozen;  while  in  1866,  with  gold  at  140,  the 
importation  was  102,341  dozen.  In  view  of 
this  uniformity,  is  it  reasonable  to  suppose  that 
in  this  the  last  half  of  the  19th  century  any 
enactment  of  law  is  likely  to  prevent  the  people 
of  the  United  States  from  obtaining  at  reasonable 
prices  so  much  of  this  article  as  they  may  be 
willing  and  able  to  pay  for  ?  We  find  the  answer 
in  the  experience  of  the  last  few  years  in  respect 
to  cigars,  on  which  a  rate  of  duty  most  excessive 
and  extravagant,  and  twice  as  great  as  that 
imposed  on  champagne,  has  been  adopted.  Thus, 
in  1859,  with  a  moderate  duty,  the  importation 
of  cigars  -was  returned  at  about  800,000,000  per 
annum;  in  1867,  with  a  duty  of  about  150  per 
cent.,  in  gold,  ad  valorem,  the  imports  are  return¬ 
ed  at  less  than  30,000,000 ;  and  yet  cigars  of 
foreign  production  continue  to  be  used  in  such 
quantities  as  to  make  it  clearly  evident  that 
the  supply  is  much  greater  than  the  returns  of 
the  legitimate  importation  would  indicate.  Again, 
opium,  with  a  duty  of  nearly  100  per  cent.,  ad 
valorem,  was  sold  freely  in  the  New  York  market 
during  the  past  year  at  lower  prices  in  currency 


*  The  diminution  of  the  exports  of  woollens  to  the  United  States  from  certain  of  the  great  manufacturing 
centres  of  Europe  was  also  very  noticeable.  Thus  the  exports  from  the  town  of  Huddersfield,  Yorkshire,  England, 
which,  for  the  quarter  ending  June  30,  1886,  were  of  the  declared  value  of  £139,775  18s.,  fell  off  under  the 
increased  tariff  on  woollens  for  the  corresponding  quarter  of  1867  to  £41,025  12s. 


22 


than  the  equivalent  of  the  market  value  through 
legitimate  sources  in  gold.* 

Another  agency  which  tends  to  counteract 
or  render  temporary  the  influence  of  increased 
duties,  in  checking  importations,  is  due  to  the 
circumstance  that  experience  shows,  that  when¬ 
ever  an  advance  has  been  made  in  the  tariff  on 
an  imported  article  which  comes  in  competition 
with  a  domestic  product, the  price  of  the  domestic 
product  is  often  advanced  to  a  degree  propor¬ 
tionate  to  the  increase  of  duty.  Prices  being 
thus  restored  to  a  common  level,  the  foreign 
producer  is  again  enabled  to  enter  the  domestic 
market,  to  a  greater  or  less  extent,  as  a  competitor. 

If  any  further  evidence  is  required,  to  prove 
the  almost  utter  impossibility  of  predicating 
anything  whatever,  respecting  the  amount  of 
importations,  from  the  rates  of  duty  imposed,  it 
will  be  found  in  a  review  of  the  experience  and 
workings  of  the  various  tariffs  that  have  been 
enacted  since  the  year  1840. 

Thus,  in  1842,  the  average  tariff  being  23.1 
per  cent.,  the  total  importations  were  of  the 
value  of  $100,162,087.  Three  years  later,  or  in 
1845,  the  tariff  having  been  advanced  to  an 
average  of  32.5,  the  total  value  of  the  importa¬ 
tions  was  $117,254,564,  or  an  increase  of  the 
average  duty  one-third,  having  increased  the 
imports  one-sixth. 

The  following  table  shows  the  varying  value 
of  imports  for  a  number  of  years,  under  com¬ 
paratively  the  same  average  rate  of  duty : 

Years.  Rate  of  duty.  Value  of  imports. 

1842  .  23.1  .  $100,162,087 

1849  .  23  147,857,439 

1854  .  23.5  .  304,562,381 

1855  .  23  261,468,520 

In  1860,  the  average  rate  of  duties  being  19 

per  cent.,  the  returned  value  of  the  imports  was 
$362,163,941.  In  1866,  the  average  rate  of 
duties  on  total  importation  being  43.19  per  cent., 
the  returned  value  of  imports  was  $473,640,354. 

In  short,  it  is  other  and  far  different  agencies 
than  the  rates  of  duty  which  may  be  imposed 
under  a  tariff  that  determines  the  extent  and 
value  of  importations. 

For  tabular  statement  showing  the  revenue 
collected  each  year,  from  1789  to  1868,  the 
amount  of  dutiable  imports  and  free  goods  im¬ 
ported  annually,  and  the  average  rate  of  duty  on 
imports  annually,  reference  is  made  to  the  ap¬ 
pendix  of  this  report  marked  F. 

It  is  evident,  therefore,  that  however  desira¬ 
ble  it  may  be,  under  the  present  financial  condi¬ 
tion  of  the  country,  to  diminish  the  drain  of  the 
precious  metals,  or  to  avoid  foreign  indebted¬ 
ness  on  account  of  importations,  the  way  for  the 
successful  and  practical  accomplishment  of  the 
object  does  not  lie  in  the  direction  of  an  increase 
of  the  existing  tariff. 


RELATIONS  OF  A  TARIFF  FOR  REVENUE  AND  A  TARIFF 
FOR  PROTECTION. 

But  whatever  of  interest  may  attach  to  the 
discussion  of  a  tariff,  framed  solely  with  a  view 
to  revenue,  such  discussion,  except  it  refers  to 
mere  matters  of  adjustment,  is  at  present  of  but 
little  practical  importance,  inasmuch  as  there  is 
no  subject  pertaining  to  our  fiscal  legislation  in 
respect  to  which  there  is  greater  unanimity  of 
public  sentiment,  than  that  which  recognizes 
the  advantage  and  necessity  of  making  the  tariff 
available  to  the  greatest  extent  possible  as  a 
source  of  revenue.  In  this  there  is  no  essential 
difference  in  the  policy  of  any  party;  and  if 
there  are  any  who  can  so  far  divest  themselves 
of  the  conditions  and  necessities  of  the  hour  as 
to  advocate  a  removal  of  all  imposts  and  an 
abolition  of  all  custom-houses,  their  expectation 
certainly  does  not  extend  to  the  immediate 
future.  It  is  only  when  we  pass  to  the  consid¬ 
eration  of  a  tariff  imposed  for  purposes  other 
than  revenue,  that  essential  differences  of  opin¬ 
ion  manifest  themselves  and  the  embarrassments 
of  the  question  are  encountered. 

In  the  consideration  of  a  tariff  for  revenue  the 
question  at  issue  would,  as  already  stated,  ap¬ 
pear  to  be  one  mainly  of  comparison,  viz:,  as 
regards  the  relative  superiority  of  this  or  some 
other  system,  for  the  collection  of  a  given  and 
necessary  amount  of  revenue. 

In  the  consideration  of  a  tariff  imposed  for 
purposes  other  than  for  revenue,  the  question  at 
issue  on  the  other  hand  would  appear  to  be  one 
of  profit  and  loss,  or  rather  of  burden  and  ad¬ 
vantage; — the  burden  being  the  tax  and  en¬ 
hanced  prices  which  the  community  consents  to 
impose  upon  itself;  and  the  advantage,  the  pro¬ 
fit  which  is  held  to  accrue  from  the  resulting 
stimulus  and  development  of  domestic  industry. 

If  these  premises  be  correct,  the  essential 
point  of  interest  in  all  this  inquiry  then  is,  sim¬ 
ply  to  ascertain  on  which  side  of  the  account 
stands  the  balance;  and  this  knowledge,  in 
turn,  is  to  be  obtained  so  far  as  this  investiga¬ 
tion  is  concerned,  through  the  analysis  and  de¬ 
termination  of  facts  and  through  the  experience 
alike  of  producers  and  consumers. — These  facts 
and  this  experience  the  Commissioner,  during 
the  last  three  years,  has  sought,  through  his 
official  position,  diligently  and  impartially  to 
obtain ;  not,  as  has  been  already  stated,  with  a 
view  of  supporting  the  theory  of  free  trade  on 
the  one  hand,  or  protection  on  the  other,  but 
solely  with  a  desire  to  know  what  policy  here¬ 
after  is  likely  to  prove  most  advantageous  to  the 
revenue  and  most  certain  to  establish  the  credit 
of  the  whole  country  upon  a  sound  and  substan¬ 
tial  basis.  To  the  result  of  this  investigation  in 
particular  he  would  next  ask  attention. 


*  The  following  extract  from  the  report  of  the  comptroller  of  customs  of  New  Brunswick,  submitted  June  29, 
1867.  has  much  significance: 

“  The  total  value  of  all  goods  imported  into  New  Brunswick  in  1866  was  $10,000,794,  against  $7,085,595  in,  1865, 
shoving  a  large  increase  on  the  year’s  importations  (41  per  cent).  The  principal  inc  ease  was  on  goods  from  the 
United  Kingdom,  the  value  of  which  was  $4,022,956,  against  $2,284,449  in  1865,  an  increase  of  over  76  per  cent. 
Two-thirds  of  the  value  of  the  imports  from  the  United  Kingdom  consisted  of  haberdashery.  St.  Johns  being  a 
eentral  point  for  travelers  from  the  States,  a  considerable  quantity  of  our  duty-paid  haberdashery  is  annually 
purchased  and  taken  away  by  them.” 

In  1866  the  duty  on  spirits  imported  into  New  Brunswick  was  increased  about  50  per  cent.,  viz;  to  35  cents 
per  gallon  and  three  per  cent,  proof.  In  face  of  this  we  have  the  commercial  phenomenon  of  a  largely  increased 
importation,  viz:  470,590  gallons,  against  311,688  in  1864. 


23 


ESSENTIAL  FEATURES  OF  THE  EXISTING  TARIFF. 

The  basis  of  the  existing  tariff  is  to  be  found 
in  the  act  of  March  2,  1861,  which  virtually  re¬ 
pealed  all  former  duties,  by  providing  that  upon 
all  raw  or  unmanufactured  articles  and  upon  all 
articles  manufactured  in  whole  or  part,  not 
enumerated  in  said  act,  the  rates  of  duty  should 
be  respectively  10  and  20  per  cent.,  ad  valorem. 
Since  this  date  there  have  been  eleven  amend¬ 
ments  essentially  affecting  rates  of  duty,  some 
of  which,  like  the  acts  of  July  14,  1862,  and 
June  30,  1867,  were  equivalent  to  almost  com¬ 
plete  revisions.* 

The  rate  of  duty  imposed  by  the  existing  tariff 
on  the  invoice  value  in  gold  of  the  dutiable 
goods  imported  into  the  United  States  has  aver¬ 
aged  for  the  last  three  fiscal  years  about  48  per 
cent.j- 

If  to  these  rates,  freights,  insurance  and  com¬ 
missions,  which  in  themselves  constitute  a  na¬ 
tural  and  unavoidable  tariff,  be  added,  the  aver¬ 


age  of  duties  will  be  still  further  increased  to 
the  extent  of  from  10  to  15  per  cent. 

Again,  the  requirements  for  revenue  growing 
out  of  the  war  having  necessitated  the  creation 
of  an  all-pervading  system  of  internal  taxation 
subsequent  to  the  increase  of  the  tariff  in  1861, 
it  became  absolutely  necessary,  in  order  to  pre¬ 
vent  such  increase  from  being  neutralized  by 
the  taxes  levied  on  the  products  of  domestic  in¬ 
dustry,  to  increase  at  least  correspondingly  the 
rates  of  duty  levied  on  the  importation  of  com¬ 
peting  products,  which  end  was  steadily  kept  in 
view,  and  in  a  great  measure  attained  in  the  re¬ 
spective  acts  of  June  30,  1864,  and  March  3, 
1865.  This  statement  is  illustrated  by  the  fol¬ 
lowing  table,  which  shows  in  respect  to  certain 
staple  articles,  the  internal  tax  imposed  by  the 
act  of  June  30,  1864,  and  subsequent  acts,  and 
the  increase  of  tariff  allowed  on  the  correspond¬ 
ing  imported  article. 


Internal  tax  imposed  by  the  act  of  June  30,  1864. 


Articles. 


Cotton,  raw . 

Bristles . 

Blue  vitriol . . 

Brushes . 

Saltpetre . 

Domestic  cottons,  jeans,  bedticks,  pantaloon  stuffs,  &c . 

Domestic  bleached  cottons . 

Axes,  hay-knives,  hoes,  steel  rakes,  sheep-shears,  scythes,  shovels,  &c. 
Iron  castings,  gas  and  water  pipe . 


Internal  tax. 

Duty  prior  to  Juno 

30,  1864. 

|  Duty  subsequent  to 

June  30,  1864. 

1 

Increase. 

$0  021* 

$0  001 

$0  03 

$0  021 

t5 

10' 

15 

5 

t5 

t20 

t25 

t5 

t5 

|35 

f40 

t5 

t5 

2 

21 

1 

t5 

3 

6" 

3* 

t5 

3 

H 

n 

t5 

t35 

45 

tio 

*3  00 

3 

§2 

*  Per  pound. 


t  Per  cent. 


t  Per  ton.  §  Or  $15  per  ton. 


Since  the  13th  of  July,  1866,  the  internal 
taxes  on  the  above  and  all  other  domestic  pro¬ 
ducts,  with  few  exceptions,  have  been  substan¬ 
tially  removed,  but  without  any  corresponding 
alterations  in  the  tariff.  The  practical  effect  of 
this  action,  therefore,  has  been  to  increase 
gradually,  and  as  it  were  insensibly,  the  percent¬ 
age  of  the  tariff,  which  increase  for  the  majority 
of  domestic  products,  will  average  five  per  cent, 
as  a  minimum.  On  some  articles,  however,  the 


comparative  increase  has  been  much  greater, 
as,  for  example,  upon  imported  liquors,  the 
increase  of  tariff  upon  which,  by  the  reduction 
of  the  internal  taxes,  must  be  regarded  as 
equivalent  to  at  least  40  per  cent. 

Notwithstanding  these  extreme  rates,  higher 
than  have  ever  before  been  levied  by  the  United 
States,  or  by  any  civilized  nation  in  modern 
times,  and  higher,  as  we  have  just  shown,  by  a 
minimum  of  five  per  cent,  than  at  the  termination 


*  The  number  of  articles  taxed  under  the  existing  tariff  and  specifically  enumerat id  :n  the  unofficial  catalogue 
generally  referred  to,  (Ogden’s  compilation,)  is  upwards  of  2,000;  but  as  many  separate  articles  are  often  embraced 
under  one  common  designation,  the  specific  number  is  undoubtedly  much  greater ;  of  these,  a  very  large  propor¬ 
tion  afford  only  a  nominal  revenue,  and  in  not  a  few  instances  the  gross  receipts  from  specific  articles  will  not  ex¬ 
ceed  the  sum  of  $50  per  annum.  That  conclusion,  however,  would  be  most  hasty  and  injudicious  which  would 
advocate  an  exemption  from  duty  of  all  articles  yielding  an  inconsiderable  amount  of  revenue,  inasmuch  as  many 
such  articles  constitute,  as  it  were,  the  outworks  which  defend  and  make  certain  the  most  important  sources  of 
revenue,  Thus,  for  example,  the  amount  of  the  article  of  sugar-candy  imported  is  very  inconsiderable,  (probably 
not  sufficient  to  defray  the  costs  of  collection,)  but  if  this  article  were  to  be  exempt  from  duty  or  admitted  at  a 
lower  rate  than  simple  sugar,  its  importation  as  a  substitute  for  sugar  would  probably  increase  to  an  extent  suffi¬ 
cient  to  seriously  affect  the  revenue. 

t  The  following  table  shows  the  exact  percentage  of  duties  to  dutiable  imports,  and  the  percentage  to  total  im¬ 
ports  for  the  three  fiscal  years  1666,  1867,  and  1868,  respectively : 


1866. 

1867. 

1868. 

Percentage  to  dutiable  imports . 

48.58 

47.34 

47.86 

Percentage  to  total  imports . 

43.19 

42.85 

44.04 

of  the  war,  the  tariff  as  it  stands  to-day,  fails  in 
a  great  degree  to  check  importations,  or  to  give 
that  degree  of  protection  to  which  persons  en¬ 
gaged  in  almost  all  branches  of  domestic  industry 
have  represented  to  Congress  that  they  are  right¬ 
fully  entitled. 

The  cause  of  this  curious  politico-economic 
phenomenon  is  undoubtedly  due  in  the  first 
instance  to  the  toleration  and  use  of  an  incon¬ 
vertible  paper  currency,  which  always  has  and 
always  will  work  to  the  prejudice  and  disadvan¬ 
tage  of  the  industry  of  every  nation  which  adopts 
it,  in  comparison  with  those  nations  who  recog¬ 
nize  only  the  standard  of  gold  and  silver  in  their 
commercial  transactions.  In  addition,  however, 
a  careful  and  impartial  review  of  the  arrangement 
and  workings  of  the  existing  tariff  will  not  fail 
to  satisfy  that  not  a  few  of  the  evils  which  those 
who  advocate  a  continued  increase  of  duties  seek 
to  remedy,  have  really  been  occasioned  by  an 
indiscriminate  and  injudicious  application  of 
identically  the  same  policy. 

The  avowed  object  of  the  tariff,  as  revised  in 
1861,  was  revenue  to  provide  for  the  expenses 
of  a  great  war.  Subordinate  only  to  this  was 
the  other  principle  of  discriminating  duties  in 
favor  of  domestic  or  home  industry — a  principle 
which  may  be  considered  as  the  present  policy 
of  the  great  majority  of  the  American  people, 
and  which,  as  we  have  already  shown,  is  recog¬ 
nized  and  virtually  acted  upon  by  all  the  leading- 
commercial  nations  of  Europe.  W ith  the  termina¬ 
tion  of  the  war,  and  with  accruing  receipts  from 
the  tariff  in  excess  of  the  actual  requirements 
of  the  treasury,  the  popular  tendency,  as  express¬ 
ed  by  legislation,  accomplished  or  projected,  has 
been  to  reverse  the  order  of  importance  of  these 
two  principles,  and  to  make  the  idea  of  revenue 
subordinate  to  protection  rather  than  protection 
subordinate  to  revenue.  And  in  carrying  out, 
furthermore,  the  idea  of  protection,  but  one  rule 
for  guidance  would  appear  to  have  been  adopted 
for  legislation,  viz :  the  assumption  that  whatever 
rate  of  duty  could  be  shown  to  be.  for  the  advan¬ 
tage  of  any  private  interest,  the  same  would 
prove  equally  advantageous  to  the  interests  of 
the  whole  country.  The  result  has  been  a  tariff 
based  upon  small  issues  rather  than  upon  any 
great  national  principle ;  a  tariff  which  is  unjust 
and  unequal ;  which  needlessly  enhances  prices ; 
which  takes  far  more  indirectly  from  the  people 
than  is  received  into  the  treasury ;  which  renders 
an  exchange  of  domestic  for  foreign  commodities 
nearly  impossible;  which  necessitates  the  con¬ 
tinual  exportation  of  obligations  of  national 
indebtedness  and  of  the  precious  metals;  and 
which,  while  professing  to  protect  American 
industry,  really,  in  many  cases,  discriminates 
against  it,.  But  as  it  is  facts  not  assertions  that 
are  wanted,  let  us  examine  the  existing  tariff 
and  see  if  the  facts  make  good  the  assertions. 
One  of  the  first  things  that  an  analysis  will  show 
is,  that  every  interest  that  has  been  strong- 
enough  or  sufficiently  persistent  to  secure  efficient 
representation  at  Washington  has  received  a  full- 
measure  of  attention,  while  every  other  interest 
that  has  not  had  sufficient  strength  behind  it  to 
prompt  to  action  has  been  imperfectly  treated, 
or  entirely  neglected.  Thus  let  any  one  glance 


at  the  great  departments  of  wool  and  iron,  and 
he  will  find  that  the  duties  on  all  the  leading 
products  have  been  carefully  increased,  harmon¬ 
ized,  and  adjusted,  in  a  great  degree,  in  accord¬ 
ance  with  the  wishes  of  those  interested. 

TARIFF  ON  DRUGS  AND  CHEMICALS. 

Now,  in  striking  contrast  to  these,  is  another 
great  department  of  the  tariff,  viz :  the  depart¬ 
ment  of  drugs  and  ehemieals,  which  embraces 
nearly  one-half  of  all  the  ai-ticles  on  the  list  of 
enumerations  on  which  a  duty  is  levied.  In  this 
department  there  is  hardly  an  individual  in  the 
nation  who  is  not  more  or  less  directly  interested. 
It  regulates  the  price  of  nearly  all  medicines 
and  remedies,  from  the  expensive  alkaloid  that 
proteets  from  malaria,  to  the  material  of  the 
eheap  infusion  that  constitutes  the  relying  remedy 
of  the  humble  housewife.;  the  gums  of  the  var¬ 
nish-maker  and  paper-stainer ;  of  all  dye-woods, 
dye  extracts,  resists  and  mordants ;  of  sulphur 
and  the  nitrates  that  form  the  basis  of  the  great 
commercial  acids;  of  the  salts  of  artificial  manures; 
of  all  the  reagents  and  tests  of  the  chemist ;  of 
the  materials  which  assist  in  the  welding  and 
polishing  of  the  metals ;  of  the  essential  oils  that 
constitute  the  raw  material  of  the  perfumer,  the 
soap-maker,  and  manufacturer  of  extracts;  of 
the  great  alkalies,  bleaching  powders,  and  anti¬ 
septics  ;  of  all  photographic  salts  and  prepara¬ 
tions;  the  enamels  of  the  jeweler;  the  fluxes  of 
the  glass-maker ;  the  astringents  of  the  tanner 
and  leather-dresser — upon  all  of  these,  and  many 
other  articles  and  products  embraced  in  this  de¬ 
partment,  the  duties  are  discordant  and  often 
antagonistic  alike  to  the  attainment  of  either 
revenue  or  protection ;  ad  valorems  being  mixed 
up  in  the  most  heterogeneous  manner  with 
specifics,  and  neither  having  in  general  the 
slightest  regard  to  the  cost  or  use  of  a  product. 
On  some  articles,  like  opium  and  the  alkaloids, 
the  duties  are  so  excessive  that  the  chief  import 
is  already  made  through  the  agency  of  the  smug¬ 
gler;  on  others  of  corresponding  use  and  cost 
the  duty  ranges  from  the  merest  nominal  to  the 
most  excessive  rates.  On  the  drugs  used  as 
medicines  the  duties  which  might  be  made  speci¬ 
fic  are  generally  ad  valorem,  and  so  high  as  to 
constitute  in  themselves  a  bounty  for  the  im¬ 
portation  of  the  worthless  material  which  all 
other  markets  have  rejected.  In  some  instances 
a  discrimination  has  actually  been  made  against 
domestic  and  in  favor  of  foreign  industry,  as  in 
the  case  of  lac  and  lac  dye,  where  the  raw  ma¬ 
terial  is  burdened  with  a  duty  of  10  cents  per 
pound,  and  the  manufactured  article  admitted 
free.  On  some  of  the  varnish  gums,  artieles 
which  compete  in  no  degree  with  any  domestic 
product,  the  duty  is  in  excess  of  their  prime 
cost  in  the  London  markets  ;  while  in  respect  to 
glass,  the  statement  is  made  to  the  Commissioner 
by  one  of  the  leading  manufacturers  of  the 
country  “  that  more  duty  is  paid  to  the  govern¬ 
ment  by  the  domestic  glass-maker  on  the  im¬ 
ported  raw  materials  used  by  him  in  his  busi¬ 
ness  than  is  received  from  duties  imposed  on  the 
importation  of  table  glass  ware  of  foreign  manu¬ 
facture.”  Now  the  reason  of  this  unfortunate 
condition  of  affairs  is  to  be  found  in  the  fact 


25 


that  it  has  never  been  made  the  special  interest 
of  intelligent  and  influential  parties  disconnected 
with  the  government  to  press  this  matter  upon 
the  attention  of  Congress ;  and  whenever  a 
partial  effort  to  arrest  the  attention  of  the  com¬ 
mittees  has  been  made,  the  claims  of  the  great 
special  interests  have  been  too  urgent  and  im¬ 
perative  to  allow  time  for  consideration.  Two 
years  ago  the  Commissioner,  aided  by  the  vol¬ 
untary  efforts  of  some  of  the  best  experts  in  the 
country  and  leaffing  members  pf  the  American 
Pharmaceutical  Society,  prepared  and  submitted 
to  Congress  a  complete  revision  of  this  impor¬ 
tant  branch  of  the  tariff.  His  work,  however, 
'was  not  only  not  accepted,  but  the  very  fact 
that  it  was  performed  has  been  made  the  occa¬ 
sion  of  complaints  as  involving  unnecessary  in¬ 
terference  with  pending  legislation,  and  a  use¬ 
less  expenditure  of  time  and  labor. 

INDISCRIMINATE  PROTECTION,  A  CHARACTERISTIC  OF 
THE  EXISTING  TARIFF. 

Another  characteristic  feature  of  the  existing 
tariff  is,  that  it  attempts  indiscriminate  or  uni¬ 
versal  protection,  an  idea,  which,  if  fully  carried 
out,  would  render  all  protection  a  nullity ;  and 
to  the  extent  to  which  it  is  carried  out  does 
more  for  foreign  as  compared  with  domestic  in¬ 
dustry  than  almost  any  other  one  agency. 

This  will  appear  evident  when  we  consider 
that  but  few  products,  the  result  of  applied 
labor  and  capital,  come  to  the  consumer  as  the 
result  of  one  process,  but  nearly  all  involve 
several  stages  or  well  defined-points  of  progress, 
in  which  the  finished  product  of  the  one  becomes 
the  raw  material  of  the  other.  If  a  tax  laid 
under  the  tariff,  with  the  view  of  protection, 
were  impartially  and  universally  apportioned  ; 
as,  for  example,  if  all  duties  were  increased  by 
one  act  ten  per  cent.,  prices,  after  a  little,  would 
be  affected  uniformly ;  all  raw  material  of 
foreign  production,  or  those  of  domestic  origin 
whose  priee  is  regulated  by  a  partial  foreign 
supply,  would  rise  equally  with  the  manu¬ 
factured  product,  and  the  cost  of  production, 
though  pushed  to  a  higher  level,  would  rela¬ 
tively  remain  as  before.  If,  on  the  contrary,  the 
distribution  of  the  tax  were  not  made  uniform, 
it  is  evident  that  whatever  was  laid  upon  a  raw 
material  would  be  equivalent  to  a  reduction  of 
protection  to  the  product  which  results  from  its 
manufacture.  But  the  term  raw  material,  as 
above  shown,  is  only  a  relative  expression ;  so 
much  so,  that  it  would  be  difficult  to  instance 
any  article,  the  product  of  industry,  to  which  it 
could  be  absolutely  and  unqualifiedly  applied. 
Thus,  coal  is  the  finished  product  of  the  miner, 
but  the  raw  material  for  the  manufacture  of  pig 
iron  ;  pig  iron,  in  turn,  becomes  the  raw  mate¬ 
rial  for  the  manufacture  of  bar  iron  ;  bar  iron 
■for  machinery,  machinery  for  textile  fabrics, 
textile  fabrics  for  clothing,  and  clothing  for  the 
laborer,  whose  efforts  in  the  single  department 
of  agriculture  determine  the  national  prosperity, 
and  indeed  the  very  existence  of  all  other  forms 
of  industry.  It  will  be  found,  furthermore,  on 
analysis,  that  the  amount  of  labor  or  capital  in¬ 
vested  or  required  in  the  several  stages  of  in¬ 
dustry  above  cited  is  very  disproportionate, 


and  increases  very  rapidly  in  the  order  of  enu¬ 
meration  ;  there  being,  for  example,  more  in¬ 
dividuals  employed  in  the  manufacture  of  cloth¬ 
ing  in  the  city  of  Boston  alone  than  there  are  in 
all  the  woollen  mills  of  Massachusetts  ;  while 
the  number  of  laborers  employed  in  agriculture 
is  far  in  excess  of  those  in  all  other  industries 
combined.  Hence  the  necessity,  in  the  construc¬ 
tion  of  a  tariff,  whether  the  object  aimed  at  be 
revenue  or  protection,  of  the  exercise  of  discri¬ 
mination  ;  which  discrimination,  in  order  that 
it  may  be  intelligent,  must  be  based  not  on  a 
consideration  singly  and  separately  of  the  in¬ 
terests  involved,  but  upon  a  consideration  and 
knowledge  of  the  relations  which  the  separate 
interests  sustain  to  the  whole,  keeping  in  view 
at  the  same  time  the  cardinal  doctrine  that  all 
legislation  approximates  to  perfection  in  the 
degree  that  it  provides  for  the  greatest  good  of 
the  greatest  number.  And  unless  this  course  is 
recognized  and  adopted,  it  never  can  be  known 
whether  the  benefit  that  may  follow  from  the 
imposition  or  increase  of  a  particular  duty  will 
not  be  more  than  counterbalanced  by  the  in¬ 
jury  that  the  same  duty  may  inflict  indirectly. 
In  fact,  the  industrial  interests  of  a  highly  civi¬ 
lized  country  are  as  mutually  inter-connected 
ancf  inter-dependent  as  are  the  diverse  parts  of 
the  human  body,  and  growth  in  both  cases 
must  be  natural,  symmetrical,  and  uniform,  or 
the  result  will  be  distortion,  torpidity,  and  par¬ 
alysis. 

The  following  incident  of  recent  tariff  ex¬ 
perience  strikingly  illustrates  the  difficulty  and 
danger  of  attempting  to  base  legislation  upon 
the  demands  of  single  interests,  even  though 
such  demands  may  in  themselves  appear,  and 
within  a  limited  sphere  actually  be,  intrinsically 
fair  and  just : 

In  the  year  1864,  the  manufacturers  of  spool 
thread  ascertained  that  fine  English  thread  was 
being  imported  as  yarn  under  a  35  per  cent,  duty 
and  afterwards  spooled  in  the  United  States, 
thus  evading  the  duty  on  spool  thread,  which 
was  considerably  higher.  Accordingly,  on 
proper  representation  of  facts,  the  tariff  was  so 
amended  that  a  duty  of  four  cents  was  imposed 
upon  each  skein  or  hank  of  unwound  thread  or 
yarn  of  840  yards,  and,  in  addition  thereto, 
thirty  per  cent,  ad  valorem — a  rate  which  prac¬ 
tically  amounted  to  prohibition.  On  the  at¬ 
tempt  being  made  to  enforce  the  duty,  it  be- 
eame  clearly  apparent  for  the  first  time  that  the 
fine  cotton  threads  or  yarns,  ranging  from  num¬ 
bers  100  to  200,  which  it  was  proposed  to  ex¬ 
clude  in  the  unwound  state,  were  needed  for 
many  other  purposes  than  for  sewing,  and  that 
some  of  them  could  not  at  that  time  be  furnished 
under  any  circumstances  in  this  country.  The 
very  best  quality  are  especially  needed  for  the 
manufacture  of  elastic  fabrics,  which  was  indis¬ 
pensable  for  the  making  of  suspenders,  gaiters, 
and  other  products  ;  and  their  manufacture,  for 
the  time  being,  would  have  been  utterly  ruined, 
could  the  object  aimed  at  in  the  duty  have  been 
practically  carried  out.  The  manufacture  of 
lastings,  coburgs,  and  other  worsted  fabrics  to 
which  these  yarns  were  essential,  was  also 


26 


then  being  for  the  first  time  entered  upon, 
and  in  one  known  case  was  actually  abandoned 
in  consequence  of  the  interruption  of  the  sup¬ 
ply  of  fine  cotton  warps  caused  by  the  attempt 
to  enforce  the  duty. 

After  considerable  difficulty,  great  interrup¬ 
tion  of  business,  and  the  reshipmcnt  to  Europe 
of  importations  of  yarn  which  had  been  ordered 
before  the  enactment  of  the  tariff  amendment  in 
question,  the  matter  was  adjusted  by  a  decision 
of  the  Treasury  to  this  effect ;  that  a  cotton 
warp  or  yarn  intended  for  use  in  the  manufacture 
of  elastic,  worsted,  or  woollen  fabrics  was  a 
manufacture  of  eotton  not  specially  enumerated 
and  was  therefore  subject  to  the  ad  valorem 
rates  imposed  on  articles  of  this  kind,  rather 
than  on  those  specifically  fixed  on  thread  or 
yarn ;  and  by  this  decision  only,  several  branches 
of  American  industry,  involving  probably  more 
of  capital  and  labor  than  was  represented  by  the 
article  which  it  was  originally  intended  to  protect 
were  saved  from  absolute  destruction. 

As  another  incident  to  this  transaction  it  may 
be  stated,  that  it  was  subsequently  found  by  ex¬ 
perience  to  be  impracticable  to  enforce  the  duty 
on  the  skein  or  hank,  according  to  the  arbitrary 
standard  of  840  yards,  the  effect  of  which  has 
been  that  yarn  in  the  skein,  bundle,  or  cop  con¬ 
tinues  to  be  imported  at  the  rate  of  duty  existing 
previous  to  the  enactment  of  the  amendment 
referred  to. 

EFFECT  OF  THE  TARIFF  ON  SHIP-BUILDING  AND 
COMMERCE. 

But  it  is  in  respect  of  the  absurdity,  as  well 
as  the  utterly  disastrous  influence  that  flows 
from  the  carrying  out  of  the  principle  of  univer¬ 
sal  and  discriminate  protection  that  the  illustra¬ 
tions  are  the  most  numerous  and  significant. 
What,  indeed,  can  be  more  instructive  than  the 
lesson  afforded  by  the  present  condition  of  the 
ship-building  interest  and  the  foreign  commerce 
of  the  United  States.  There  are  three  things, 
the  importation  of  which  is  theoretically  impos¬ 
sible,  viz.,  counterfeit  money,  indecent  publica¬ 
tions,  and  ships.  In  addition  to  this  measure 
of  absolute  prohibition  of  ships  there  has  been 
superadded,  for  the  benefit  of  American  ship¬ 
builders  and  ship-owners,  a  bounty  in  the  re¬ 
strictions  which  the  law  imposes  on  all  foreign 
vessels  from  engaging  in  the  coastwise  trade ; 
and  yet  to-day,  speaking  generally  in  respect  to 
ocean  traffic,  we  can  neither  build,  buy,  nor  sell 
an  American  vessel. 

This  result  is  obviously  due  in  no  small  part 
to  the  fact  that  while  protecting  the  ships,  we 
have  also  protected  to  nearly  an  equal  degree 


the  separate  constituents  that  enter  into  the 
construction  of  ships,  viz.,  the  timber,  the  iron, 
the  copper,  the  cordage,  and  the  canvas ;  and 
these  two  ageneies  have  so  far  neutralized  and 
counterbalanced  each  other  that  neither  party, 
within  this  particular  sphere  of  industry,  has 
been  benefitted  ;  the  ships  not  having  been  built, 
or  the  constituents  of  their  construction  created 
or  applied,  while  the  community  at  large,  whose 
interest  it  is  that  all  these  branches  of  industry 
should  prosper,  has  likewise  received  no  benefit 
but  rather  detriment  from  the  suspension  or 
diversion  of  labor  and  capital  from  its  previous 
employments.  The  same  s}7stem,  moreover,  of 
checks  and  balances  growing  out  of  the  indis¬ 
criminate  and  universal  taxation  under  the  tariff 
which  we  have  thus  shown  to  exist  in  ship¬ 
building,  has  been  also  so  far  extended  to  every 
other  branch  of  production,  that  if  ships  availa -■ 
hie  for  foreign  trade  were  to-day  furnished  to  hand , 
without  cost,  their  use  must  be  exceedingly  limited, 
for  the  reason  that  the  high  prices  of  all  domestic 
commodities  would  effectually  prevent  that  exchange 
with  foreign  countries  width  in  itself  constitutes 
commerce. 

The  nation  during  the  last  few  years  has 
rapidly  learned  to  appreciate  the  effect  of  an 
universal  and  indiscriminate  system  of  internal 
taxation  in  the  enhancement  of  prices  and  in 
the  restriction  of  production,  but  it  has  thus  far 
failed  to  recognize,  to  the  same  extent,  the  in¬ 
evitable  tendency  which  the  adoption  of  a  simi¬ 
lar  system  of  tazation  under  the  tariff  has 
to  produce  results  corresponding  and  analogous. 
Examples  of  the  working  of  the  tariff  in  par¬ 
ticular  instances  will,  however,  greatly  assist 
this  understanding. 

TAXATION  AND  ENHANCEMENT  OF  THE  PRICE  OF 
LUMBER. 

We  select  as  our  first  illustration  the  article 
of  lumber,  on  which  the  government  levies  a 
duty  of  twenty  per  cent,  ad  valorem ;  which 
rate,  by  the  addition  of  the  percentage  which 
the  importer  almost  invariably  will  add  by 
reason  of  the  payment  of  the  duty,  may  probably 
be  considered  as  equivalent  at  the  present  time 
to  twenty-five  per  cent. 

Now,  the  increasing  necessity  and  use  of  this 
indispensable  article  is  such,  that  the  demand 
for  the  last  few  years  has  been  fully  equal  to  or 
has  tended  to  exceed  supply,  which  in  turn  has 
resulted  in  constantly  augmented  prices ;  the 
price,  for  example,  of  the  cheapest  varieties 
of  lumber  in  the  Albany,  New  York,  market 
having  advanced  since  1861,  about  100  peij 
cent.* 


*  Table  showing  the  prices  of  the  leading  varieties  of  lumber  in  the  Albany,  New  York  market,  on  the  first  of 
May,  from  18G1  to  1868,  inclusive. 


1861. 

1862. 

1863. 

1864. 

1865. 

1866. 

1867. 

1868.  yr 

Pine . 

$16  00 

$18 

$24 

$30 

$22 

$29 

$35 

$31 

Spruce . . 

10  00 

12 

15 

21 

17 

24 

25 

20 

Hemlock . 

8  50 

9 

12 

17 

14 

19 

22 

17 

Black  Walnut . 

42 

60 

90 

70 

80 

75 

70 

It  will  be  observed  that  of  the  lumber  most  in  demand  for  building  purposes,  the  advance  in  prices  from  1861  to 
1867  wa3  as  follows  :  Spruce,  150  per  cent.  ;  pine,  119,  and  hemlock,  the  most  in  demand  for  erection  of  the  com¬ 
mon  descriptions  of  dwellings,  158  per  cent.  In  May,  1868,  the  prices  had  fallen  from  $4  to  $5  per  M.  feet, 
making  the  increase  from  the  prices  of  1860,  on  the  above  varieties,  100,94,  and  100  per  cent,  respectively. 


27 


A  supply  of  foreign  lumber  ( i .  <?.,  from  the 
British  provinces)  being  actually  essential  to 
meet  the  requirements  of  the  country — a  fact 
generally  conceded — two  things  follow  as  a  ne¬ 
cessity;  first,  that  whatever  duty  is  imposed 
on  the  foreign  product  is  paid  wholly  by  the 
consumer,  and  is  therefore  equivalent  to  so  much 
dii  ect  tax,  and  secondly,  that  the  price  of  the 
imported  article  regulates  and  determines  the 
selling  price  of  the  domestic  product,  at  least  for 
all  that  portion  of  the  latter  which  is  exposed 
to  the  competition  of  the  foreign  supply  in  the 
open  and  leading  markets.  Whatever,  therefore, 
under  these  circumstances  enhances  the  price  of 
foreign  lumber,  be  it  a  tax  or  some  other  agency, 
will  from  necessity  augment  the  price  of  the 
domestic  product  to  the  same  extent.  Or,  in 
other  words,  a  tax  on  the  importation  of  foreign 
lumber  becomes  also  a  tax  upon  the  consumers 
of  the  whole  domestic  product ;  with  this  essen¬ 
tial  difference,  that  in  the  one  case  the  proceeds 
of  the  tax  results  to  the  benefit  of  the  national 
treasury;  and  in  the  other  to  the  benefit  ex¬ 
clusively  of  private  interests. 

Let  us  now  see  to  what  these  respective  taxes 
amount.  The  net  invoice  value  of  the  importa¬ 
tion  of  rough  timber,  during  the  fiscal  year 
1868,  was  about  seven  and  a  half  millions  of 
dollars ;  while  the  value  of  tha  domestic  pro¬ 
duct  for  the  same  period,  or  that  part  of  it  which 
entered  into  competition  with  this  foreign  im¬ 
port,  may  be  approximately  estimated  at  fifty- 
four  millions.  For  every  dollar,  therefore, 
that  is  taken  in  the  form  of  a  direct  tax,  seven 
are  taken  indirectly  through  the  increase  of 
prices  ;  or,  in  other  words,  $2,250,000  currency 
are  received  into  the  treasury  at  an  indirect 
cost  of  sixteen  millions.  And  this  is  not  all. 
25  per  cent,  on  the  increased  price  of  lumber 
means  25  per  cent,  in  the  increased  price  of 
houses.  25  per  cent  in  the  increased  price  of 
vessels,  of  fences,  of  railroad  ties,  and  other  con¬ 
structions  of  which  wood  is  the  principal  con¬ 
stituent.*  All  these  find  their  expression  in  the 
increase  of  wages  and  of  the  cost  of  other  forms 
of  raw  material ;  and  these  in  turn  augment  the 
cost  of  manufactures  ;  and  thus  the  wave  of  taxa¬ 
tion,  emanating  from  a  common  centre,  continues 
to  extend  and  enlarge  itself  until  no  man  can 
measure  the  breadth  and  power  of  its  influence, 
but  breaking  ultimately  with  its  full  force  upon 
two  classes  of  society,  viz. :  those  living  upon 
fixed  incomes  and  the  day  laborer,  for  it  is  not 
in  the  power  of  either  of  these  to  arbitrarily 
increase  his  income  as  a  measure  of  compensa¬ 
tion.  And  all  this  has  been  done  in  the  name 
of  protection  to  American  industry  ! 

But  are  not  the  producers  of  lumber,  it  may 


be  asked,  equally  entitled  to  the  same  measure 
of  protection  against  the  cheaper  labor  and 
capital  of  foreign  countries  as  is  conceded  to 
other  domestic  interests?  We  find  the  answer, 
in  the  first  place,  in  the  claim  which  the  lumber 
producers  themselves  preferred  during  the  con¬ 
tinuance  of  the  universal  system  of  internal 
taxation,  viz.:  that  their  product,  by  reason  of 
its  importance  as  a  fundamental  raw  material  in 
almost  all  other  branches  of  industry,  should  be 
exempted  from  all  burden  of  an  excise ;  and  this 
claim  was  promptly  acknowledged  and  acceded 
to  by  Congress.  Again,  it  has  never  been  pre¬ 
tended,  even  by  those  who  advocate  the  most 
extreme  rates  in  respect  to  protection,  that  pro¬ 
tection,  or  what  is  the  same  thing,  a  bounty, 
should  ever  be  given  to  any  interest  that  is  able 
otherwise  to  sufficiently  sustain  itself.  Now, 
previous  to  the  repeal  of  the  reciprocity  treaty 
there  was  no  duty  imposed  on  raw  and  unmanu¬ 
factured  lumber  imported  from  the  British 
provinces,  and  previous  to  that  time  no  interest 
was  in  a  more  flourishing  and  stable  condition 
than  that  engaged  in  the  production  of  lumber. 
Since  the  commencement  of  the  war,  moreover, 
the  increase  in  the  price  of  lumber  has  been  far  in 
advance  of  the  average  increase  in  the  price  of  labor 
and  of  other  commodities. 

The  interest  of  lumber  production,  therefore, 
judged  simply  by  comparison,  does  not  stand  on 
terms  of  equality  in  respect  to  a  elaim  for  pro¬ 
tection  with  other  products ;  and  if  it  did,  there 
can  be  no  benefit  shown  to  accrue  from  taxation 
levied  on  the  importation  of  lumber  that  will,  in 
any  degree,  compensate  for  the  injury  that  is 
thereby  inevitably  entailed  upon  other  branches 
of  industry.  To  tax  lumber,  therefore,  under 
the  tariff,  even  to  the  slightest  extent,  is  to  dis¬ 
criminate  against  rather  than  protect  American 
industry. 

A  wise  foresight,  furthermore,  would  indicate 
that  the  national  interests  are  likely  to  be  best 
subserved  by  restricting  rather  than  stimulating 
the  destruction  of  our  forests,  wrhicli,  in  con¬ 
sequence  of  the  continually  augmenting  demand 
for  lumber,  are  diminishing  and  receding  with 
alarming  rapidity.  So  certain,  moreover,  is  the 
future  advance  in  the  price  of  lumber,  owing  to 
increased  demand  and  diminished  supply,  that 
if  it  were  possible  to  draw  for  the  next  ten  years 
the  whole  domestic  supply  from  foreign  sources, 
the  result  would  unquestionably  be  for  the 
benefit  rather  than  the  detriment  of  the  country; 
while  in  respect  to  private  interests  the  increase 
in  value  of  timber  lands  held  in  reserve  during 
the  same  period  would  probably  exceed  any 
average  interest  that  would  be  likely  to  accrue 
from  a  different  employment  of  capital.f 


*  In  the  United  States  there  were  sixty-six  trades  represented  in  1860  as  dependent  upon  wood  as  their  material 
for  manufa  taring  ;  and  242,958  men  employed  in  the  simple  trade  of  carpentry  alone — or  three  times  as  many  as 
worked  in  cotton,  and  thirteen  times  as  many  as  worked  in  the  production  of  flour  and  meal. 

t  That  the  views  here  presented  are  beginning  to  be  entertained  in  those  sections  of  the  country  at  present  most 
directly  interested  in  this  branch  of  business,  is  evident  from  the  following  extracts  from  a  communication  from  an 
authority  on  this  subject  in  the  State  of  Maine,  who  takes  the  view  that  the  State  itself  should  not  allow  the  manu¬ 
facture  of  lumber  to  exceed  its  growth,  and  that  “the  sources  of  wealth  represented  by  the  forests  of  the  State 
should  not  be  wastefully  drawn  upon  for  the  sake  of  present  gain  to  the  few  at  the  expense  of  future  profit  to 
the  public.”  “  In  the  manufacture  of  the  yearly  growth  of  the  forests  of  Maine,”  says  the  writer,  “  the  lumber 
business  would  still  be  very  extensive,  and  play  an  important  part  in  increasing  the  wealth  of  the  State.  But 
as  it  is  now  conducted,  business  will  soon  begin  to  decrease  in  these  places  insted  of  increasing  with  the 
population  as  it  ought  to  do.”  “Fifty  years  ago  the  immense  tracts  of  woodlands  on  the  banks  of  the  Saco 
seemed  almost  inexhaustible  ;  but  with  the  mills  that  have  been  built,  and  the  extensive  manufacture  of  ‘  box 


28 


The  increase  in  the  receipts  of  lumber  at  some 
of  the  principal  lumber  markets  of  the  country- 
shows  the  remarkable  increase  in  the  demand 
and  consumption  of  this  article.  Thus  the  in¬ 
crease  at  Albany  of  the  quantity  of  boards  and 
scantling  received  by  the  canals  alone,  in  the 
two  years  from  1865  to  1867,  was  nearly  50  per 
cent.,  or  25  per  cent,  per  annum ;  while  at  Chi¬ 
cago,  in  the  four  years  from  1863  to  1867,  the 
increase  in  the  receipts  were  as  follows  :  on 
lumber,  113  per  cent.;  shingles,  159  per  cent.; 
and  in  laths,  251  per  cent. 

TAXATION  OF  SALT. 

The  Commissioner  would  next  ask  attention 
to  the  taxation  imposed  under  the  tariff  on  salt, 
a  product  which  properly  should  be  classed  as 
an  article  of  food. 

The  importing  prices  of  salt  at  the  principal 
foreing  sources  of  supply  range  from  7  to  11 
cents  per  bushel ;  the  average  price  at  Turk’s 
Island  being  10  cents,  at  Cadiz  7  cents,  and  at 
Liverpool  8  cents  per  bushel. 

In  1841  the  importation  of  salt  was  free  ;  in 
1842  a  duty  of  8  cents  per  bushel  was  imposed 
on  salt  in  bulk,  which  was  changed  in  1846  to 
20  per  cent,  ad  valorem,  or  about  2  cents  per 
bushel ;  in  1857  it  was  reduced  to  15  per  cent., 
or  about  1£  cent  per  bushel ;  in  March,  1861,  it 
was  increased  to  4  cents  per  bushel;  in  August, 
1861,  to  12  cents,  and  in  July,  1862,  to  18  cents 
per  100  pounds.  As  the  weight  of  a  bushel  of 
salt  ranges  from  56  to  85  pounds,  it  will,  there¬ 
fore,  be  seen  that  the  existing  duty  is  equivalent 
to  an  ad  valorem  on  the  importing  prices,  as 
above  given,  of  from  100  to  170  per  cent.,  an 
average  higher  than  is  imposed  under  the  tariff 
on  any  other  article  of  primal  necessity  and 
consumption. 

The  relation  between  the  duties  and  the  im¬ 
porting  cost  of  salt  will,  however,  be  rendered 
more  apparent  by  the  following  statements, 
showing,  in  several  specific  instances,  the  re¬ 
sults  of  actual  experience  : 

No.  1. — Brig  Goodwin,  from  Cadiz,  arrived  at 
New  York,  August,  1867  : 

Cost  of  cargo,  15,340  bushels,  (gold)  $1,159  83 
Duty  paid  on  same  ------  1,967  36 

Percentage  of  duty  to  first  cost  -  -  170 

No.  2. — Brig  Sarah  Kennedy,  from  Bonaire, 
New  York,  September,  1867  : 

Cost  of  cargo,  16,740  bushels,  (gold)  $1,500  00 
Duty  paid  on  same  -  -  -  -  -  -  2,160  00 

Percentage  of  duty  to  first  cost  -  -  144 

No.  3. — Ship  Ontario,  from  Liverpool,  New  York, 
September,  1867 : 

Cost  of  cargo,  5,429  sacks  Liver¬ 
pool  ground  salt .  $2,531  40 

Duty  paid  on  same. .  2,913  84 

Percentage  of  duty  to  first  cost .  115 


In  1860  the  actual  cost  of  a  cargo  of  salt  of 
18,330  bushels,  imported  into  Boston  from  the 
port  of  Trepani,  Sicily,  was  declared  at  $2,063  41. 
The  duty  on  this  import  under  the  then  existing 
tariff,  (viz.,  15  per  cent,  ad  valorem,)  was 
$309  46.  The  duty  on  the  same  quantity  of 
salt  imported  from  the  same  port  under  the 
present  tariff  of  18  cents  per  100  pounds,  would 
amount  to  $6,089  58,  (gold.)  The  freights  paid 
(in  gold)  in  1868  were  not  essentially  different 
from  those  of  1860,  but  the  selling  price  of  salt 
has  advanced  about  28  cents  per  bushel,  or  from 
20  to  23  cents  in  1860  to  from  48  to  51  cents  in 
1868.  And  yet,  notwithstanding  this  experi¬ 
ence,  it  is  claimed  that  the  duties  as  they  now 
stand  are  not  sufficiently  protective,  and  a  fur¬ 
ther  advance  of  from  18  to  24  cents  per  100 
pounds  is  urgently  demanded,  and  has  been  ac¬ 
ceded  to  in  the  bill  now  pending.  (House  6i 
Representatives,  No.  1211.) 

In  considering  this  application  the  question 
which  naturally  suggests  itself,  is :  Are  such 
excessive  duties  necessary  to  the  existence  and 
development  of  the  salt  manufacturing  industry 
in  the  United  States  ?  And,  independent  of  all 
particulars,  it  may  be  said,  in  reply,  that  it 
would  seem  in  the  first  instance,  to  stand  to 
reason,  that  there  must  be  something  entirely 
abnormal  and  unnatural  in  the  prosecution  of  a 
business  of  any  kind  which  requires,  as  the  primal 
condition  of  its  existence,  the  imposition  of  a 
tariff  rangingfrom  100  to  570  per  cent.advalorem, 
and  a  consequent  average  enhancement  of  its 
price  to  consumers  greater  than  that  paid  by 
other  commercial  nations, 

Coming  down,  however,  to  particulars  we 
find  that  the  leading  organizations  engaged  in 
the  manufacture  of  salt  in  the  United  States  are 
at  Syracuse,  in  the  State  of  New  York,  and 
Saginaw,  in  the  State  of  Michigan.  Now,  in 
order  to  the  attainment  of  a  full  understanding 
of  the  relation  which  the  duty  on  imported  salt 
sustains  to  the  manufacture  and  cost  of  the  do¬ 
mestic  product,  we  propose  to  ask  attention 
briefly  to  the  condition  of  these  two  companies, 
and  allow  each  one  of  them  to  submit  the  state¬ 
ment  of  its  case  throught  he  medium  of  the  sworn 
testimony  of  its  principal  officers. 

The  association  at  Syracuse,  New  York, 
obtains  its  brine  or  raw  material  from  a  State 
reservation,  and  pays  to  the  State  as  a  remune¬ 
ration  for  a  free  supply  of  brine  and  for  inspec¬ 
tion,  weighing,  branding,  and  for  keeping  in 
order  the  conduits,  buildings,  and  machinery,  a 
toll  of  one  cent  on  each  bushel  of  salt  manufac¬ 
tured. 

Previous  to  1860  the  Commissioner  finds  that 
the  manufacture  of  salt  at  this  place  was  the  re¬ 
sult  of  independent  individual,  rather  than  of 
associated  enterprise,  and  was  lacking  in  such  a 
systematic  management,  both  as  regards  the 
manufacturing  and  selling,  as  was  essential  to 


shooks’  and  ‘headings,’  the  lumber  that  now  comes  down  is  comparatively  small,  showing  that  tho  extent  of  the 
trade  is  beginning  to  cause  an  approximate  exhaustion  of  the  forest.” 

By  a  report  made  during  the  past  year  to  the  Foreign  Office  of  Great  Britain  by  the  British  consul  at  Stockholm, 
it  would  also  appear  that  notwithstanding  91  per  cent,  of  the  area  of  the  kingdom  of  Sweden  consists  chiefly 
of  forest  land,  there  is  a  general  apprehension  of  approaching  failure  of  the  product  of  timber,  and  a  reduction  in 
the  export  of  wood  ;  all  the  forests  in  the  populated  part3  of  the  kingdom  and  along  the  great  lines  of  communlca^ 
tion  having  been  nearly  or  quite  exhausted.  It  is  also  stated  that  no  considerable  compensation  for  this  deficiency 
can  at  present  be  expected  from  the  vast  Norrland  forests  of  that  country,  in  consequence  of  their  almost 
inaccessibility. 


29 


continued  and  uninterrupted  prosperity.  In 
1860,  this  result  having  become  apparent,  the 
various  individual  interests  were  consolidated 
into  one  association,  an  enactment  having  pre¬ 
viously  been  obtained  from  the  State  Legisla¬ 
ture  (viz.,  in  1869)  which  forbade  the  super¬ 
intendent  from  furnishing  brine  to  any  other,  or 
to  new  works,  “until  the  quantity  raised  and 
distributed  by  the  state  shall  be  sufficient  for 
fully  supplying  all  the  existing  works  through 
the  manufacturing  season.”  As  the  supply  of 
salt  water  was  not  then  nor  has  since  been  in 
excess  of  demand,  the  effect  of  this  law  w  as  ob¬ 
viously  to  restrict  the  production  of  salt  to  the 
tnen  existing  manufacturers  or  their  representa¬ 
tives.  In  the  organization  of  the  association, 
each  individual  manufacturer  leased  his  salt 
property  to  the  company  at  a  yearly  rental  of 
1,2£  per  cent,  on  an  appraised  valuation  which 
valuation  was  considerably  greater  than  what 
at  that  time  was  undoubtedly  the  actual  cost. 
About  five  per  cent,  of  the  aggregate  valuation,  or 
about  $160,0G0,  was  paid  in  to  furnish  a  work¬ 
ing  capital,  and  the  stock  pro-rated  to  the  manu¬ 
facturers  leasing  their  property. 

With  this  preliminary  explanation,  attention 
is  invited  to  the  following  abstract  of  testimony. 

Svbacuse,  New  Yoek,  October  24,  1867- 

John  W.  Parker,  secretary  of  the  Onondaga  Salt  Com* 
pany,  being  sworn,  testified  ; 

Question.  What  has  been  the  average  quantity  of 
salt  made  during  the  last  ten  years  on  the  Onondaga 
reservation  ? — Answer.  In  round  numbers,  6,895, CCO 
bushels.  The  present  production  is  above  tbe  average 
of  this  period,  and  for  the  present  year  (1867)  it  will  be 
from  seven  to  seven  and  a  half  million  bushels,  (actual 
production,  7,595,565. 

Q.  Is  the  quantity  of  brine  obtained  sufficient  to  work 
all  the  blocks  and  covers  ?— -  A.  Ihere  is  not  a  sufficient 
quantity  raised,  but  we  think  there  is  an  inexhaustible 
supply. 

Q.  W  hat  is  the  lowest  strength  of  brine  that  you  can 
work  economically  ?  A.  About  60  degrees  by  the  salo- 
meter. 

Q.  Are  you  in  the  habit  of  wrorking  brine  of  less 
strength  than  60  degrees? — A.  We  have  several  wells 
which  furnish  brine  of  less  strength,  and  this  we  use, 
to  some  extent,  with  the  stronger. 

Q.  Please  state  the  nature  of  present  organization  of 
the  Onondaga  Salt  Company  ? — A.  It  is  an  organiza¬ 
tion  which  was  originated  in  I860,  and  is  to  continue 
for  ten  years  from  that  time.  Previous  to  1860,  the 
manufacture  of  cover  or  solar  salt  was  mostly  carried 
on  by  separate  companies,  and  block  salt  by  individu¬ 
als.  In  1860  these  separate  companies  were  consolidated. 

Q.  Under  what  conditions  was  the  individual  property 
consolidated  ? — A.  The  property  was  appraised  by  the 
parties  in  interest.  The  original  valuation  of  the  prop¬ 
erty  was  $3,200,000. 

Q.  What  inhrest  was  guaranteed  on  the  property 
thus  stocked  ? — A.  W7e  pay  on  the  valuation  121  per 
cent,  as  rent. 

Q.  WTas  that  valuation  a  real  valuation,  or  was  it  a  price 
above  cost? — A.  It  might  be  considered  on  a  general 
average,  as  a  high  valuation  at  that  particular  time. 

Q.  Was  it  not,  in  fact,  33  per  cent,  above  the  cost  at 
that  time  ? — A.  No  ;  it  was  not. 

Q.  Was  it  not  20  per  cent,  above  cost  ? — A,  The  gene¬ 
ral  average  of  a  salt  block  is  $5,000. 

Q.  Was  the  actual  cost  of  making  a  salt  block  in  1860 
in 'excess  of  $3,000  ?— A.  I  think  it  was  considerably.  I 
can  speak  more  definitely  in  regard  to  coarse  salt. 

Q.  What  is  the  working  capital  of  your  company  ? — 
A.  It  was  originally  $160,000,  contributed  by  the  par¬ 
ties  to  the  block  in  the  proportion  of  five  per  cent.on  each 
share. 

Q.  Will  you  state  what  dividends  the  company  has  de¬ 
clared  on  the  stock  thus  paid  in  ? — A.  Well,  I  don’t 
know  as  I  can  do  that.  I  shall  have  to  refer  to  my  books 
for  the  exact  figures.  The  company  has  in  some  years 
paid  very  heavy  dividends.  The  first  year  they  incurred 


a  loss.  That  was  in  1860.  They  did  not  make  enough 
that  year  to  pay  expenses.  In  1861  they  made  a  small 
dividend.  In  1862, 1863,  and  1864  they  made  very  large 
dividends.  The  price  of  salt  was  enormously  high, 
owing  to  the  state  of  the  country  at  the  time. 

Q.  Will  you  state  how  large  the  dividends  were  ? — A. 
On  the  14th  of  December,  1861,  the  first  dividend  was 
made.  It  was  a  dividend  cf  seven  per  cent.  The  next 
dividend  was  made  in  March,  1862,  of  121  per  cent. 
The  next  was  made  April  23,  1862,  of  $1  25  per  share. 
The  next  was  September  13,  1862,  also  $1  25  per  share. 
The  next,  Septemter  27,  1862,  also  $1  25  per  share. 
Salt  was  then  selling  at  $5  per  barrel.  The  next  was 
October  4  of  the  same  year,  of  $1  25  per  share,  and 
again  on  October  11,  of  the  same  year,  of  $2  50  per 
share.  The  last  extra  dividend  was  made  February  20, 
1864.  Since  then  the  average  annual  dividends  have 
been  seven  per  cent. 

Q.  Has  the  stock  of  the  company  been  increased  since 
that  time? — A.  It  has  been  doubled.  [Making  the 
present  woiking  capital  of  the  company  $320,000.] 

Q.  Have  you  divided  since  1864  your  full  profits,  or 
have  you  carried  any  considerable  amount  to  a  surplus 
fund  ? — A.  We  have  a  surplus  on  hand  of  about  $600,000. 
Since  the  organization  cf  the  company  in  I860  the 
whole  amount  paid  in  dividends  is  about  $2,000,000;  but 
of  the  profits  made  by  the  company  since  its  organization 
two-thirds  at  least  have  been  made  in  coal  and  coal 
mining.  The  property  of  the  company  is  now  abso¬ 
lutely  worth  $4,498,969. 

Q.  What  is  the  largest  amount  of  government  tax 
which  you  paid  in  any  year? — .  A.  Nearly  $200,000. 

Q.  What  legislation  do  you  think  is  necessary  to  insure 
the  continuance  and  prosperity  of  ycur  company  ?— A. 
Well,  I  think  it  wculd  be  for  the  benefit  cf  the  salt  com¬ 
pany,  and  mankind  generally,  if  we  could  have  a  market 
in  New  York  at  the  same  profit  as  in  the  west.  We  are 
obliged  to  send  from  a  million  to  a  million  and  a  half 
or  two  million  of  bushels  to  New  York  per  annum,  and 
upon  this  we  make  no  profit. 

Q.  What,  in  jour  opinion,  would  be  the  effect  on 
your  works  if  the  tariff  should  be  reduced? — A.  It 
would  takeus  out  of  the  market  as  a  matter  cf  course. 
We  could  not  sustain  ourselves  there  for  a  moment. 
We  ought  to  have  a  higher  duty.  All  the  business  we 
now  do  in  New  York  is  without  profit.  It  is,  in  fact,  a 
loss. 

Q.  What  is  the  freight  on  a  barrel  of  salt  to  New  York  ? 
—A,  It  will  average  about  12|  cents  per  ICO  pounds,  or 
37s  cents  per  barrel. 

Q.  Are  your  salt  wells  and  works  ■worked  up  to  their 
fullest  capacity  ? — A.  Not  the  wells,  but  the  works  are. 
We  are  making  all  that  is  possible  under  the  present  con¬ 
dition  of  things. 

Q.  What  proportion  of  your  salt  do  you  export  to 
Canada  ? — A.  About  100,000  barrels  a  year,  (518,904 
bushels  in  1867.)  The  quantity  has  not  materially 
differed  in  the  last  few  years. 

Q.  Please  state  the  present  range  of  prices  for  your 
salt  ? — A.  Our  price  here  (at  Syracuse)  is  $235  per  barrel. 
At  Buffalo  our  nominal  price  is  $2  50;  further  west, 
$2  40.  In  New  York  city  it  sells  at  $1  75  to  $1  80. 

Q,  W7hy  should  you  fell  your  salt  at  a  less  price  at  tide- 
waterthan  at  Buffalo  and  other  western  markets  ? — A. 
Because  we  have  nott  he  same^competition  to  encounter 
in  the  west. 

Q.  Then  I  am  to  understand  that  you  regulate  your 
prices  by  the  competition ? — A.  Yes:  and  the  compara¬ 
tively  large  amount  which  we  dispose  of  in  the  chief 
cities  is  another  consideration  for  lowering  the  price. 
Our  first  business  is  to  take  care  of  the  heme  trade,  on 
which  we  require  only  a  fair  profit. 

In  submitting  this  testimony  it  is  but  simple 
justice  to  state  that  it  was  not  only  claimed  by 
the  Onondaga  Salt  Company,  but  that  figures  in 
support  cf  the  claim  were  also  submitted,  show¬ 
ing  that  a  very  large  proportion  of  the  great 
profits  realized  since  1861  have  been  due  to  the 
possession  and  control  of  cheap  coal,  and  that  if 
the  average  market  price  had  been  paid  by  them 
for  the  coal  used  under  their  furnaces,  the  cost 
of  manufacturing  salt  would  have  been  greatly 
enhanced.  But  allowing  all  this,  it  is  difficult 
to  see  what  bearing  the  fact  has  upon  the  claim 
of  this  particular  company  for  an  increase  of  the 


30 


tariff,  inasmuch  as  in  determining  the  question 
we  are  to  look  at  the  circumstances  as  things 
actually  are,  and  not'  as  they  might  have  been 
if  less  of  foresight  and  good  management  had  been 
exercised.  To  maintain  the  contrary  would  be, 
in  fact,  to  assume  that  the  amount  of  protection 
to  be  awarded  to  a  particular  industry  should 
be  in  proportion  to  the  incompetence  displayed 
in  its  prosecution. 

The  next  witness,to  whose  testimony  atten¬ 
tion  is  invited,  is  Duncan  Stewart,  Esq.,  of  De¬ 
troit,  president  of  a  salt  manufacturing  corn- 
many  at  Saginaw,  Michigan,  who,  being  sworn, 
(October  15,  1867,)  made  answer  to  the  follow¬ 
ing  questions  : 

Q.  Will  you  please  to  state  the  present  condition  of 
the  business  of  producing  salt  in  the  Saginaw  salt 
district  ? — Answer.  For  the  first  few  years  that  the 
business  of  manufacturing  salt  in  Saginaw  was  carried 
on,  there  were  very  few  people  engaged  in  it  who  knew 


anything  at  all  about  the  business,  as  to  how  it  ought 
to  be  managed.  This  left  the  salt  interest  laboring 
under  a  very  great  disadvantage.  I  should  say  that  at 
least  one  half  of  all  the  money  that  has  been  invested 
in  the  salt  business  there  has  been  squandered  uselessly 
and  extravagantly,  and  that  the  business  up  to  last  year 
has  paid  little  or  no  profit.  This  has  not  been  owing 
to  any  disadvantage  or  defect  in  the  business  itself,  but 
is  mainly  owing  to  the  competition  which  has  existed 
among  the  manufacturers,  there  being  a  large  num¬ 
ber  of  manufacturers,  and  each  of  them  competing  in 
the  same  market  with  all  the  others.  Nineteen-twentieths 
perhaps  of  all  those  engaged  in  the  business,  not  having 
the  requisite  capital  to  carry  it  on,  have  to  throw  their 
salt  into  the  market  a3  soon  as  it  is  produced.  This 
has,  however,  been  remedied  to  some  extent.  About 
75  per  cent,  of  those  engaged  in  the  business  now  are 
associated  into  companies,  called  the  Saginaw  Bay 
Company,  and  the  Saginaw  Valley  Salt  Company.  ,1 
think  there  is  but  about  one  quarter  of  the  whole  in¬ 
terest  outside  of  these  associations  now.  The  result  has 
been  better  management,  greater  unity  of  action,  less 
competition  and  better  prices.  I  submit  a  tableof  the 
cost  of  making  salt  in  the  years  1864, 1865,  and  1866,  with 
the  average  rate  of  sales  and  profit  and  loss. 


Cost  of  making  Salt  by  the  Saginaw  Valley  Salt  Company  in  1864,  1865,  and  1866. 


Year. 

* 6 
o 
o 

£ 

0D 

73 

1 

M 

Taxes. 

Wages. 

Repairs. 

Material. 

Incidental 

Total. 

0Q 

O 

73 

CO 

Profit  and  loss. 

1864  . 

1865  . 

1866  . 

1837*. ... 

$0  90.5 
71.5 
59 

$0  48 
42.5 
38.7 

$0  12.5 
20 
10.5 

$0  54.3 
41.5 
41.3 

$0  16.5 
12.5 
11.2 

$0  05.2 

6 

6.3 

$0  03.5 
2} 

1.5 

$2  30.5 

1  96} 

1  68.5 

1  50 

$2  18.5 

1  83} 

1  82 

1  78 

$0  12  per  bbl.  loss. 
12.5  Do. 

13.5per  bbl.profit 
28  Do. 

*  Estimated. 


I  will  stale  that  the  loss  exhibited  in  this  table  was 
brought  about  by  bad  management. 

Q.  Has  there  been  any  essential  reduction  of  freights 
from  the  Saginaw  dist  ict  to  the  various  lake  ports? — A. 
The  average  freights  this  season  to  the  Lake  Erie  ports 
will  not  exceed  50  per  cent,  of  the  average  rates  of  last 
year.  Freights  to  Toledo  are  about  25  cents  against  75 
for  the  early  part  of  the  season,  and  a  dollar  for  the  later 
part  of  the  season.  The  Detroit  freights  ran  from  35 
cents  to  $1  50  in  former  years — this  year  20  cents.  The 
diminution  of  freights  has,  of  itself,  converted  the  man¬ 
ufacture  of  salt  in  the  Saginaw  valley  into  a  fair  success, 
where,  without  it,  it  would  have  been  an  absolute  failure. 

Q.  What  is  the  average  price  per  barrel  of  Saginaw  sait 
in  the  lake  por  ts  ? — A.  It  has  sold  at  an  average  of  $2  18, 
&3  nearly  as  may  be. 

Q.  To  what  extent  does  the  salt  manufactured  at  Syra¬ 
cuse  compete  with  salt  manufactured  in  the  Saginaw  dis¬ 
trict  ? — A.  It  competes  with  it  in  all  the  lake  ports,  the 
Syracuse  people  selling  their  salt  in  the  larger  ports  at  a 
rate  very  much  below  what  they  charge  in  New  York  ; 
for  instance,  for  the  same  kind  of  salt  which  they  sell  in 
New  York  for  $2  50,  they  sell  in  Buffalo  for  $2  20,  mak¬ 
ing  a  difference  of  30  cents  a  barrel.  This  is  done  for 
the  purpose  of  damaging  the  interests  of  the  Sagi¬ 
naw  manufacturers,  the  present  high  tariff  giving  them 
nearly  the  entire  costrol  of  the  seaboard  markets,  where 
they  make  large  profits,  enabling  them  to  throw  their 
salt  into  the  western  ports  at,  sometimes,  much  below 
the  cost  of  product  at  Syracuse.  This  they  do  for  the 
purpose  of  destroying  the  Saginaw  interest. 

Q.  Have  you  any  knowledge  of  the  profits  derived 
from  the  business  of  manufacturing  salt  during  the  last 
few  years  ? — A.  Yes,  sir  ;  I  should  say  that  our  own  ex¬ 
perience,  according  to  the  statement  I  have  handed  in, 
shows  a  loss  in  the  year  1864,  without  counting  the  loss 
of  interest  on  investments,  and  in  1865  also.  The  profit 
made  in  1866  is  profit  on  manufacturing  without  count¬ 
ing  anything  for  interest  on  investments  ;  so  that  on  the 
whole  it  has  been  a  losing  business. 

Q.  Have  you  any  knowledge  as  to  what  have  been  the 
profits  derived  from  the  manufacture  of  salt  in  Syracuse 
during  the  last  few  years? — A.  Not  further  than  the 
prices  quoted  in  the  eastern  markets  ;  and  judging  from 
those  prices,  they  must  either  have  made  enormous 


profits  there,  or  else  have  made  an  enormous  loss  at 
the  west.  My  own  opinion  is  that  they  made  very  large 
profits  in  the  seaboard  trade,  from  the  quotations  given. 

Q.  Are  the  present  high  rates  of  duty  on  foreign  salt 
necessary,  in  your  opinion,  to  encourage  our  domestic 
production  of  this  article  ?— A  I  think  not. 

Q.  Will  you  state  the  reason  why  ?— A.  Because  we 
have  the  entire  benefit  of  the  cost  of  transportation’ 
which  must  be  added  to  the  cost  of  the  foreign  article  ; 
this  of  itself  is  a  sufficient  reason  why  wo  ought  to  be 
able  to  compete  successfully  with  foreign  salt  at  a  less 
rate  of  duty  than  is  now  paid.  The  tariff  enures  almost 
entirely  to  the  advantage  of  the  Syracuse  manufactur¬ 
ers,  giving  them  almost  the  entire  control  of  tho  sea¬ 
board  market,  enabling  them  to  realize  large  profits  ; 
enabling  them  to  lay  the  salt  which  they  se:;d  to  tho 
western  markeis  at  a  rate  as  low  as  to  be  ruinous  to  the 
interests  of  the  Saginaw  manufacturers. 

Q.  You  have  no  doubt  that  this  system  has  been  pur" 
sued  by  parties  engaged  in  the  salt  interest  at  Syracuse  ? 
— A.  I  have  no  doubt  whatever  that  it  has  been  pursued 
systematically  and  constantly  since  the  commencement 
of  the  manufacture  of  salt  at  Saginaw. 

Q.  Do  you  look  for  an  increased  production  of  salt  in  tho 
Saginaw  district  during  the  coming  year  ?  A.  Not  with  the 
present  results  of  the  trade,  but  a  fall  in  theprice  of  labor 
and  material  would  probably  largely  increase  the  quantity 
of  salt  produced,  very  many  of  the  works  having,  even  lou¬ 
der  the  favorable  circumstances  of  this  year  not  run  at  all 
There  is  another  matter  connected  with  the  tariff  that  I 
would  like  to  call  attention  to,  and  it  is  the  duty  of  50 
cents  per  cord  that  is  levied  upon  cord  wood  imported 
into  the  United  States  from  Canada.  It  would  be  a 
great  boon  to  have  this  repealed  :  there  being  a  short 
supply  of  wood  in  the  Saginaw  valley,  which  could  bo 
remedied  by  imports  from  the  Canadian  shores  where 
the  supply  is  abundant.  And  it  would  also  diminish 
the  cost  of  living  of  the  laboring  people.  It  operates 
not  as  a  general,  but  a  purely  local  tax,  and  is  creating 
a  great  deal  of  dissatisfaction  in  the  labo.ing  community. 
They  look  upon  it  as  an  oppression.  Cord  wood  has 
become  extremely  scarce  in  all  the  frontier  States :  and 
while  its  consumption  is  largely  increasing,  ita  source 
of  supply  is  diminishing. 


31 


The  next  witness  is  James  Oakes,  of  Boston’ 
dealer  in  salt,  who  being  duly  sworn,  testified 
as  follows: 

Q.  Will  you  state  the  prices  at  which  Syracuse  salt  is 
sold  in  the  Boston  market,  October,  ISOS? — Answer.  When 
sold  to  fishermen,  wlio  have  the  right  to  u-e  foreign  salt  in 
bond,  that  is,  to  salt  fish  on  board  their  vessels,  the  price 
is  made  to  compete  with  foreign  » alt.  say  from  S3  to  35 
cents  per  bushel  ;  but  when  sold  to  those  fishermen  who 
salt  their  fish  on  shore,  and  therefore  have  no  right  to  use 
salt  in  bond,  the  price  is  from  15  to  17  cents  per  bu'hel 
higher.  In  other  words,  the  Syracuse  salt  is  sold  to  fisher¬ 
men  at  15  to  17  cents  per  bushel  less  than  when  sold  for 
salting  meat.  Desides  this  difference  in  price  the  manufactur¬ 
ers  of  Sytacu-e  salt  employ  agents  to  go  to  the  different 
large  fishing  towns  to  solicit  the  patronage  of  the  fisher- 
nen,  and  will  deliver  s  tit  alongside  of  the  fishermen’s 
vessels  at  the  different  places  free  of  charge  to  the  con¬ 
sumer  ;  the  expense  of  which  cannot  be  less  than  ten  cents 
per  bushel,  including  “fall  short  in  measure,”  and  in  trans¬ 
porting  from  one  port  to  the  other.  If  a  large  profit 
did  not  arise  even  when  selling  to  the  fl-hermen  at  33  to 
%  cents  per  bushel,  it  is  presumed  that  the  manufacturers 
would  not  employ  agents  to  go  among  tha  fishermen  to  so¬ 
licit  their  custom,  and  then  deliver  Ihe  salt  alorgside.  In 
view  of  these  facts  it  seems  to  me  evident  that  if  the  selling 
of  salt  lo  the  fishermen  be  a  remunerative  business,  and 
I  think  it  is,  from  the  vigor  with  which  the  agents  of  the 
manu>acturer8  promote  it,  then  the  profits  on  salt  sold  for 
curing  meats  and  other  purposes,  on  which  15  to  17  cents 
per  bushel  additional  is  charged,  must  be  exorbitant;  and 
it  should  also  be  borne  in  mind  that  (he  expenses  ol  con¬ 
ducting  the  latter  branch  of  the  business  are  much  less 
than  when  the  sa  t  is  delivered  alongside  the  fishing 
vessels. 

Q.  W’as  any  reduction  made  in  the  price  of  domestic 
salt  in  consequence  of  abatement  in  1SG7,  and  the  entire 
removal  in  I86S  of  the  intern  »1  revenue  tax  on  the  tnanu 
facture  of  salt  ?  A. — I  think  not.  The  price  of  domestic 
salt,  when  sold  for  salting  fish  on  board  vessel,  is  fixed  so 
as  to  compete  with  foreign  salt  in  bond,  without  regard  to 
tax  of  any  kind.* 

With,  this  exposition  of  facts  and  testimony 
the  question  of  the  necessity  or  expediency  of 
further  increasing  the  high  duties  on  salt  may 


well  be  submitted  without  argument.  On  the 
other  hand,  however,  when  we  consider  how, 
through  the  indispensable  use  of  this  article,  an 
increase  of  its  price  (from  23  cents  per  bushel  in 
18G1,  to  48  eents  in  1868)  has  come  home  to  the 
whole  people ;  how  such  increase  affects  the 
great  industrial  interests  involved  in  the  pack¬ 
ing  of  beef,  pork,  fish  and  butter,  and  conse¬ 
quently  the  distribution  and  price  of  food  at 
home  and  its  exchange  for  foreign  commodities 
ubroad :  and  especially  when  we  consider  that 
the  internal  tax  on  this  article — which  in  1865 
was  collected  from  one  company  to  the  extent 
of  about  $200,000 — has  been  entirely  removed  ;f 
in  view  of  all  these  circumstances,  may  we  not 
well  ask,  whether  protection  to  American  in¬ 
dustry  and  a  regard  to  the  interests  of  the  whole 
people  does  not  demand,  not  only  that  there  bo 
no  further  increase  of  the  tariff  on  the  price  of 
salt,  but  that  a  reasonable  and  moderate  reduc¬ 
tion  of  the  existing  duties  be  promptly  conceded. 
One  further  illustration  of  the  effects  of  the 
existing  duties  on  salt  may  he  presented.  In 
the  Gulf  of  California,  just  north  of  the  26th 
parallel,  there  is  an  island  —  Carmen — where 
salt  of  remarkable  purity  is  deposited  by  natural 
agencies  in  inexhaustible  quantities.  The  situa¬ 
tion  and  condition  of  this  island  are  such,  that 
it  wouid  seem  as  if  it  were  intended  to  he 
the  natural  and  cheap  source  of  supply  of  salt 
for  the  whole  Pacific  coast  of  our  country ;  and 
yet  by  the  agency  of  men,  and  in  the  name  of 
protection,  this  free  gift  of  God,  and  this  great 
source  of  national  wealth,  has  been  ren¬ 
dered  praetically  of  no  account,  inasmuch  as  the 
royalty  exacted  by  the  Mexican  government, 
the  United  States  tariff  added,  and  the  expenses 


*  We  condense  this  testimony  for  the  benefit  of  those  readers  who  are  not  business  men:  The  testimony  of  John  W. 
Barker,  Secretary  of  the  Onondaga  Salt  Company,  given  in  October,  1807,  shows  that  the  average  production  of  the  Syracuse 
salt  for  ten  years  past  has  been  6,895,000  bushels.  The  Company  was  organized  in  1S63,  for  tea  years,  by  a  combination  of  all 
those  who  were  then  engaged  In  producing  salt  on  the  Onondaga  reservation.  All  these  propriciors  put  in  their  property  at 
their  own  valuation,  which  Mr.  Barker  admits  to  have  been  a  high  one,  but  not  33  per  cent,  too  high,  making  in  the  aggregate 
$3,200,000,  and  12  1-2  per  cent,  is  paid  on  that  valuation  as  rent  to  the  original  owners  ;  making  an  actual  cash  dividend  of  that 
amount,  at  least,  before  any  profits  whatever  appear  on  the  books  of  the  Company. 

The  parties  in  interest  contributed  five  per  cent,  on  their  shares  as  working  capital,  making  $160,000.  Since  1360, 1  he  Com¬ 
pany  lias  paid  in  cash  dividends  $2,000,000  ;  has  doubled  its  working  capital,  making  it  $320,000  ;  and  has  a  cash  surplus  on 
hand  of  $600,000  ;  and  it  lias  improved  its  property  till  “  it  is  absolutely  worth  $1,493, 969.”  To  these  confessed  profits  of 
$2,653,000,  must  be  added  the  12  1  2  per  cent,  “rent”  paid  on  $3,200,000  for  seven  years,  amounting  to  just  $2,800,000  ;  so  that 
the  actual  profits  to  the  proprietors  for  seven  years  were  $5,853,000.  This  sum,  an  average  of  $837,000  per  annum,  is  earued  by 
a  cash  working  capital  of  $160,000  upon  property  which,  when  the  Company  was  formed,  was  wholly  unproductive,  was  in  fact, 
worked  at  a  loss. 

Mr.  Barker  also  testified  that  the  Company  exported  100,000  barrels  every  year  to  Canada;  the  quantity  being  quite 
uniform.  It  appears,  therefore,  that  where  they  have  no  “  protection,”  they  are  fully  able  to  compete  with  foreign  pro¬ 
ducts. 

He  further  swore  that  the  Company  sell  their  salt  in  H  ew  York,  after  paying  37  1-2  cents  a  barrel  to  get  it  there,  at  $1  75  to 
$1  80  per  barrel  ;  but  charge  at  the  wells  $2  35  per  barrel ;  so  that  it  is  actually  cheaper  for  the  peop’e  of  Syracuse  or  Buffalo  to 
b»,y  the  Syracuse  9alt  in  New  York  and  take  it  hence  by  rail,  than  to  buy  it  at  the  works.  This  they  do  because  there  is 
“  competition”  In  the  New  York  market ;  but  where  there  is  no  competition  they  take  all  they  can  get.  And  they  want  laws 
to  prevent  “competition”  everywhere.  “  I  think  it  would  be  for  the  benefit  of  the  Salt  Company,  and  mankind  generally,*' 
swears  Mr.  Barker,  “  if  we  could  have  a  market  in  New  York  at  the  same  profit  as  in  the  West.” 

Again,  Mr.  Duncan  Stewart,  the  President  of  the  other  great  Salt  Company  of  this  country,  that  at  Saginaw,  Michigan, 
testifies  that  the  enormous  duty  on  salt  merely  goes  to  swell  the  unreasonable  profits  of  the  Syracuse  monopoly,  giving  them  tho 
control  of  the  Eastern  markets,  and  so  enabling  them  to  break  £down  all  competition  elsewhere  ;  and  that  this  duty  is  not 
necessary  to  encourage  domestic  production. 

Mr.  James  Oakes,  of  Boston,  a  salt  dealer,  testified  that  the  Syracuse  Company  sell  their  salt  to  fishermen  on  board  vessels 
at  from  15  to  17  cents  per  bushel  lower  than  they  will  sell  it  to  those  who  salt  fish  on  shore;  and  are  so  eager  to  make  sales, 
even  at  the  low  price  which  they  get  outside  of  the  “  protection”  of  the  tariff,  that  they  employ  agents  to  solicit  this  form  of 
patronage,  and  deliver  the  salt  at  the  ship’s  side,  at  an  additional  expense  to  the  Company  of  not  less  than  ten  cents  per  bushel* 
—[Editors  of  the  Evening  Posr.] 

t  As  has  been  before  shown,  the  price  of  coarse  salt  per  barrel  in  Chicago  ruled  higher  during  the  years  1866-63,  subsequent 
to  the  removal  of  the  internal  revenue  tax,  than  in  the  year  1835,  when  a  heavy  tax  was  imposed. 


32 


of  collecting  and  transportation,  in  the  aggregate 
amount  so  nearly  to  the  price  of  salt  obtained 
from  other  sources  in  San  Francisco,  as  almost 
completely  to  eat  up  all  profits,  and  thus  close 
in  a  great  degree  the  only  market  to  which  it 
can  be  taken.* 

The  result  of  all  this  is,  that  capital  and  labor, 
in  a  section  of  country  where  capital  and  labor 
are  of  all  things  most  in  demand,  are  withdrawn 
from  other  employments  and  diverted  to  doing 
that  which  nature  herself  has  already  done 
much  more  perfectly,  viz. :  making  salt  from 
sea-water  in  the  bay  of  San  Francisco,  at  a  cost 
of  from  $7  to  1 0  per  ton. 

The  character  and  results  of  this  unnatural  in¬ 
dustry  may  be  inferred  from  the  following  ex¬ 
tract  from  a  report  made  to  the  Commissioner 
by  one  of  the  best  recognized  authorities  on  this 
subject  on  the  Pacific  coast. 

The  bay  salt  produced  at  San  Francisco  is  frequently 
Qf  an  inferior  quality,  and  is  mixed  with  a  large  propor¬ 
tion  of  Carmen  Island  salt  before  it  can  be  made  suitable 
for  many  of  the  purposes  for  which  salt  is  required. 
The  high  price  of  labor,  the  absence  of  all  reasonable 
facilities,  and  the  inferior  quality  of  the  salt  produced 
at  the  works,  all  combine  to  make  the  industry  one  of 
no  importance  on  this  coast,  and  not  one  that  deserves 
special  protection.  At  present  the  duty  on  Carmen 
Island  salt  amounts  almost  to  prohibition,  and  but  from 
3,000  to  4,000  tons  are  yearly  consumed.  Could  it  be 
admitted  free  or  at  a  lower  rate  of  duty,  the  consump¬ 
tion  of  this  one  variety  would  amount  to  at  least 
15,000  tons  per  annum.  It  is  now  utterly  impossible  to 
make  money  in  many  parts  of  California  and  Oregon 
by  packing  beef  and  pork,  owing  to  the  high  price  of 
salt,  occasioned  by  the  excessive  duty  ;  which  upon  the 
Carmen  Island  product  amounts  to  more  than  300  per 
cent,  of  the  original  cost,  exclusive  of  freight  by  steam¬ 
ers.  I  say  nothing  about  the  mining  interests  which 
would  be  advanced  by  cheap  salt,  but  these  wall  be 


ultimately  very  important,  as  the  sulphurets  containing 
gold  are  being  worked  with  great  success  by  chlorina¬ 
tion  in  California,  and  salt  in  this  is  one  of  the  principal 
items  of  expense.! 

TAXATION  ON  PIG  IRON. 

Again,  the  article  of  pig  iron  affords  a  striking 
illustration  of  an  instance  where  a  duty  originally 
levied  for  revenue  and  protection,  or  as  an  offset 
to  internal  taxes,  has  been  continued  long  after 
its  object  has  beenfully  attained,  for  the  interest, 
of  the  few,  but  to  the  detriment  of  the  many. 

The  ‘existing  duty  on  pig  iron  is  $9,  gold ; 
equivalent  to  over  $12  currency.  The  average 
expenditure  requisite  to  produce  a  ton  of  pig  iron 
in  the  United  States  to-day  may  be  fairly 
esteemed  as  not  in  excess  of  $26  per  ton,  cur¬ 
rency  ;  and  in  the  cases  of  furnaces  favorably 
situated  as  regards  cheap  coal  or  ore,  and  under 
good  management,  the  actual  cost,  could  it  b<* 
truly  ascertained,  would  not  probably  be  found 
in  excess  of  $24.  Now  the  Selling  price  of  Nos. 
1  and  2  pig  iron  in  the  markets  of  the  United 
States  at  present,  and  for  the  last  year,  has 
ranged  from  $37  to  $42  per  ton,  with  a  demand 
continually  tending  to  exceed  supply.:}: 

Under  these  circumstances  the  manufacturers 
of  pig  iron  have,  to  the  detriment  of  the  rolling- 
mill  interest,  and  to  the  expense  of  every  ‘consumer 
of  iron  from  a  rail  to  a  ploughshare,  and  from  a 
boiler  plate  to  a  tenpenny  nail,  realized  continued 
profits  which  have  hardly  any  parallel  in  the 
history  of  legitimate  industry,  the  returns  of  one 
set  of  furnaces,  in  one  of  the  middle  States,  com¬ 
municated  to  the  Commissioner,  showing  a  yearly 
product  of  35,000  tons,  on  a  capital  of  $450,000, 
sold  at  a  profit  of  from  $10  to  $13  per  ton. 


*The  items  which  make  up  this  cost,  as  reported  to  the  Commissioner,  are  as  follows  ; 

Cost  of  collecting  and  delivering  on  board  a  vessel,  per  ton  of  2,000  pounds .  $1  16 

United  States  duty,  (over  300  per  cent.) . . .  3  60 

Freights .  5  00 

Mexican  royalty  and  incidentals .  2  74 


Cost  of  Carman  Island  salt  laid  down  in  San  Francisco,  August,  1868,  gold .  12  50 


t  The  following  analyses,  made  during  the  past  year  at  San  Francisco,  show  the  superiority  of  Carmen  Island 
salt  as  compared  with  that  manufactured  in  the  Bay  of  San  Francisco. 


Carmen 

Island. 

Bay  Salt. 

3.320 

5.950 

Sulphate  of  lime . . . 

1.416  . 

0.157 

“  “  magnesia . 

0.000 

0.742 

Chloride  of  calcium . . 

0.402 

0.000 

“  “  magnesium . 

0.066 

1.016 

“  “  sodivm . 

95.796 

92.135 

100.000 

100.00^ 

t  Thus  wc  quote  from  recent  price  currents  of  recognized  authority  : 

July,  1868  —  Furnaces  are  stil*  running  on  hard  iron,  and  there  Is  not  enough  No  1  iron  to  meet  the  demand.  Trices  are 
nominally  $42  for  No.  1  extra ;  $36  to  33  for  No.  2  extra  for  American,  and  $42  to  $45  for  Scotch.  The  latter  is  also  becoming 
scarce. 

August ,  1S63  — No  1  extra  and  2  American  extra  irons  continue  scarce,  and  prices  rule  from  $41  to  $43  ;  the  offerings  few  a^d 
stock  exhausted  The  demand  for  1  extra  and  2  extra  pig  iron  is  increasing,  without  at  present  an  adequate  supply. 

September.  1868. — American  pig  iron  has  not  materially  changed  in  price,  and  we  do  not  alter  our  quotations  No.  1  continues 
very  scarce,  and  the  demand  is  in  excess  of  the  supply.  No  2  extra  is  al»o  hard  to  find  Bar  iron  is  verv  firm,  and  holders 
are  indisposed  to  make  concessions  The  mills  are  fully  occupied,  at-d  in  most  instances  considerably  behind  their  orders — in  some 
cases  four  to  six  weeks  The  stock  they  have  on  hand  is  unusually  small. 

November.  1568 — Ameiican  pig  is  unchanged,  with  scarcely  enough  in  market  to  make  any  business.  We  quote  No.  1 
$4.2  to  $13  ;  No  2  extra,  $38  ;  No.  2$3<i  to  $37  Furnaces  are  more  firm  m  their  deliveries.  Scotch  pig  is  held  at  higher  figures,  and 
holders  are  not  anxious  to  sell  Bar  iron  is  unchanged,  the  demand  from  store  being  light,  but  the  mills  continue  fully  occupied, 
being  in  many  cases  a  month  or  six  weeks  behind  their  orders. 

I)teember.  24,  1868. — tsince  our  last  report  there  has  not  been  any  especial  change  in  the  market.  American  pig  is  very  scarce, 
and  iots,  when  wanted,  are  sometimes  bard  to  find.  No.  1  is  generally  held  at  $41,  though  there  have  been  sales  at  $40  50  for 
prompt  cash.  By  the  manufacturers  of  pig  iron  it  is  contended  that  during  the  coming  year  prices  will  range  higher  than  they 
Lave  been. — Iron  Age 


33 


The  Commissioner,  as  he  writes,  (November, 
1868,)  has  before  him  letters  from  the  represent¬ 
atives  of  the  bar  and  sheet-iron  interests  in  nearly 
all  sections  of  the  country,  to  this  effect :  “  Our 
works  are  busy  but  not  remunerative.  The 
profit  of  the  iron  manufacture  is  all  absorbed  by 
the  manufacturers  of  pig  metal.  Our  only  hope 
is  in  equalization,  and  in  a  fair  increase  of  pro¬ 
tection  by  Congress  at  its  next  session.” 

Now,  it  would  seem  that  if  the  manufacturers 
of  pig  iron  had  really  at  heart  the  great  interests 
of  American  industry,  they  would  of  their  own 
accord  memorialize  Congress  to  this  effect :  “  Our 
^  profits  being  far  larger  than  is  necessary  for  the 
prosperity  and  rapid  extension  of  our  business, 
we  desire  and  can  have  no  more  efficient  protec¬ 
tion  than  what  would  of  necessity  be  guaranteed 
to  us  by  the  prosperity  and  extension  of  the  roll- 
t  ing-mill  interest;  and  this  protection  can  be 
readily  attained,  with  benefit  alike  to  producers 
and  consumers,  by  affording  under  the  existing 
tariff  to  the  manufacturers  of  rolled  iron  cheaper 
raw  material.  "VVe  therefore  request  that  the 
duty  on  pig  iron,  so  far  as  it  has  heretofore  been 
imposed  or  maintained  for  our  benefit,  may  be 
relaxed  or  wholly  abolished  in  the  interest  of  the 
associated  branches  of  the  iron  industry,  which 
are  less  prosperous.”  The  Commissioner  has 
not,  however,  heard  that  any  such  movement 
has  been  contemplated,  but  on  the  contrary  it  is 
apparent  from  an  inspection  of  House  bill  No. 
1,211,  now  pending,  that  the  manufacturers  of 
pig  iron  propose  to  allow  the  representatives  of 
the  bar  iron  interest  to  ask  from  Congress  at  this 
session  such  further  legislation  as  will,  without 
reducing  the  present  unduly  enhanced  cost  of 
pig  iron,  guarantee  to  the  latter  at  the  expense 
of  the  consumers  such  additional  profit  as  may 
render  their  business  remunerative. 

ADDITIONAL  EXAMPLES. 

The  Commissioner  lias  thus  selected  lumber, 
salt,  and  pig  iron  as  illustrations  of  the  working 
of  the  present  tariff,  because  these  articles,  in 
their  production  and  application,  are  widely  and 
familiarly  known.  He  might,  however,  have 
selected  many  others  whose  example  would  have 
been  equally  pertinent ;  but  he  believes  enough 
has  been  said  to  fully  prove  the  necessity  of  a 
revision  of  the  existing  tariff,  with  a  view  of  in¬ 
creasing  domestic  production  by  removing  ob¬ 
stacles  which  now  obstruct  the  path  of  national 
development.  A  few  illustrations  derived  from 
House  bill  No.  1211,  now  pending,  may,  how¬ 
ever,  be  given  to  prove  the  danger  of  a  partial 
Revision,  which  may  appear  to  be  a  change  in 
the  direction  of  greater  freedom. 

He  would  first  ask  attention  to  the  article  of 
quinine,  which  ought  to  be  admitted  free,  or  at 
a  low  rate  of  duty,  unless  it  shall  be  admitted 
fhat  it  is  the  policy  of  the  government  to  at¬ 
tempt  to  collect  a  revenue  from  an  article  upon 
which  the  health  of  the  people  in  large  sections 
of  our  country  depends.  The  duty  on  quinine 
was  raised,  in  1862,  from  30  per  cent,  to  45  per 
cent.,  at  the  time  when  a  duty  of  20  per  cent, 
was  imposed  on  the  raw  material  of  its  manu¬ 
facture — cinchona  bark — (before  free,)  and  when, 
in  addition  to  a  direct  internal  revenue  tax,  a 


heavy  tax  was  also  imposed  on  distilled  spirits, 
which  is  indispensable  for  the  manufacture  of 
this  alkaloid.  Now,  although  the  internal  reve¬ 
nue  tax  on  quinine  has  been  entirely  removed, 
and  the  tax  on  spirits  greatly  reduced,  it  is  pro¬ 
posed  in  House  bill  No.  1211  to  entirely  remove 
the  duty  on  cinchona  bark,  without  making  any 
corresponding  reduction  in  duty  on  quinine,  the 
practical  effect  of  which  is  to  afford  an  additional 
and  very  large  protection  on  quinine,  under  the 
specious  pretext  of  an  abatement  of  duties,  and 
thus  place  it  in  the  power  of  a  few  manufactur¬ 
ers  to  unduly  enhance  the  price  of  an  article 
whose  use  is  almost  indispensable  to  existence 
in  certain  sections  of  the  country. 

Again,  referring  to  the  same  bill,  it  will  be 
seen  that  it  is  proposed  in  like  manner  to  afford 
indirectly  a  large  additional  protection  on  glue 
by  removing  all  duties  from  the  raw  material 
of  its  manufacture,  but  allowing  the  present  high 
duty  on  the  finished  product  to  remain  unaltered. 
The  Commissioner  submits  that  there  is  nothing- 
in  the  condition  of  the  glue  manufacture  of  the 
United  States  that  warrants  the  imposition  of 
such  an  additional  tax  upon  every  carpenter, 
cabinet-maker,  book-binder  and  wall  paper 
manufacturer  in  the  country ;  and  he  does  not 
believe  that  the  representatives  of  the  quinine 
and  glue  interest  would  have  been  bold  enough 
to  have  asked  openly  from  Congress  for  that  in¬ 
crease  of  20  per  cent,  and  10  per  cent,  respect¬ 
ively  on  their  products  which  they  now  propose 
to  obtain  indirectly  through  an  act  of  apparent 
liberality. 

The  Commissioner  also  fails  to  see  the  protec¬ 
tion  to  American  industry  involved  in  the  pro¬ 
position  made  in  the  same  bill  to  impose  new 
and  heavy  burdens  of  taxation  upon  the  great 
industrial  interest  of  paper,  soap,  glass,  calico 
printing,  and  bleaching  by  increasing  the  duty 
now  levied  upon  the  importation  of  the  crude 
carbonates  of  soda  ( i .  e.,  soda  ash)  100  per  cent. 
How  important  these  products  are  to  the  indus¬ 
tries  above  referred  to,  and  how  extensive  would 
be  the  taxation  to  the  whole  community,  arising 
from  even  a  small  increase  in  their  price,  may 
be  readily  inferred  from  the  single  fact  that  the 
annual  industrial  consumption  of  the  common 
salts  of  soda  in  the  United  States  is  at  present 
in  excess  of  one  hundred  and  fifty  millions  of 
pounds. 

It  is  apparent  that  the  questions  here  raised 
by  the  Commissioner  have  really  nothing  what¬ 
ever  to  do  with  either  the  theory  or  the  practice 
of  free  trade  or  protection.  Protection  implies 
help  and  defence  to  the  weak ;  but  in  the  instances 
cited  the  help  has  been  given  to  the  strong  at 
the  expense  of  the  weak;  and  in  this  the  proverb 
of  old  is  as  true  in  respect  to  nations  as  it  is  of 
individuals,  viz.,  “he  that  giveth  to  the  rich 
shall  surely  come  to  want.” 

RESULT  OF  EXISTING  INFLUENCES  ON  NATIONAL 
DEVELOPMENT. 

Let  us,  however,  briefly  consider  the  influence 
and  tendency  of  the  state  of  things  we  have 
described,  whether  such  a  state  of  things  be  the 
result  of  our  irredeemable  currency,  or  injudi¬ 
cious  and  indiscriminate  taxation. 


34 


All  eommerce  is  in  the  nature  of  barter  or 
exchange.  The  men  who  bring  to  us  coffee, 
sugar,  tea,  hides,  silks,  dye-stuffs,  and  the  like, 
are  not  the  men  whose  labor  or  capital  has  been 
directly  Concerned  in  the  production  of  these 
articles,  but  men  whose  simple  and  sole  business 
is  to  exchange  these  products  at  a  profit,  for  the 
products  of  other  nations.  What  the  exchanger 
desires  most  to  receive  is  product  in  kind,  which 
he  may  further  exchange  with  additional  profit 
elsewhere,  and  at  the  same  time  realize  a  profit 
both  ways  on  the  agencies  employed  by  him  in 
transmission,  viz.,  on  his  vessels,  by  their  freights. 
What  he  desires  least  to  receive  is  gold  or  silver, 
inasmuch  as  the  intrinsic  value  of  these  articles 
is  nearly  the  same  in  all  countries,  and  their 
movement  and  transmission,  instead  of  being  a 
source  of  profit,  is  rather  a  source  of  expense. 

Now,  the  condition  o.f  things  in  the  United 
States  is  just  this.  We  have  so  raised  the  cost 
of  all  domestic  products  that  exchange  in  kind 
with  all  foreign  nations  is  almost  impossible. 
The  majority  of  what  foreign  nations  have  to 
sell  us,  as  already  shown,  we  must  or  will  have. 
What  foreign  nations  want  and  we  produce — 
cotton  aud  a  few  other  articles  excepted — they 
can  buy  elsewhere  cheaper.  We  are  therefore 
obliged  to  pay  in  no  small  part  for  such  foreign 
productions  as  we  need  or  will  have,  either  in 
the  precious  metals,  or  what  is  worse,  in  unduly 
depreciated  promises  of  national  payment.  And 
yet  there  are  men  who  are  so  far  unable  to  realize 
this  condition  of  affairs,  that  they  severally 
desire  and  honestly  think  they  can  remedy  the 
evils  in  question  by  measures  which,  like  the 
increase  of  the  currency,  the  increase  of  the  tariff, 
or  other  forms  of  taxation,  will  inevitably  make 
prices  and  the  cost  of  production  still  higher, 
and  thus  aggravate  the  very  difficulties  which 
are  already  so  serious. 

now  THE  UNITED  STATES  TRADES  WITH  THE  AR¬ 
GENTINE  REPUBLIC. 

As  a  practical  illustration  of  the  above  pro¬ 
position,  let  us  subject  to  analysis  the  commer¬ 
cial  relations  existing  between  the  United  States 
and  the  Argentine  Republic  of  South  America, 
(Buenos  Ayres).  The  necessities  of  trade  between 
the  two  countries  belong  in  the  first  instance  to 
the  United  States,  which  does  not  afford  a  supply 
of  domestic  hides  sufficient  to  meet  more  than 
58  per  cent,  of  its  domestic  consumption  of 
leather;  and  has,  in  addition,  practically  no 
domestic  supply  whatever  of  either  goat  skins  or 
horse-hair.  Now  the  Argentine  Republic  has 
these  articles  especially  to  sell  and  export,  and 
if  she  is  willing  to  dispose  of  them  on  terms 
equally  advantageous  with  other  nations,  it  is 
not  a  matter  of  choice  on  the  part  of  the  United 
States  whether  she  will  trade,  but  a  matter  of 
necessity. 

It  is  also  worth  while  to  diverge  for  a  moment 
from  the  discussion  of  the  immediate  subject 
under  consideration,  and  see  how  important  is 
the  relation  of  this  supply  of  foreign  hides  to 
Amr"ican  domestic  industry,  and  how  good  a 
th:  g  the  United  States  makes  of  it.  The  es- 
'  unated  value  of  all  the  domestic  hides  manufac¬ 
tured  in  the  United  States  during  the  year  1866, 


at  $5  50  each  was  $19,250,000.  The  estimated 
value  of  all  the  foreign  hides  received  at  the 
principal  Atlantic  ports  of  the  United  States 
during  the  same  year  was  about  $14,000,000, 
I  (values  in  both  instances  being  reduced  to  cur- 
j  rency  with  an  assumed  gold  premium  of  40  per 
cent.,)  making  a  total  of  $33,250,000  as  the  value 
j  of  the  raw  material  hides  for  the  year  in  question. 

Now  during  this  same  year  there  was  received 
i  in  the  city  of  Boston  unmanufactured  leather  of 
!  domestic  tanning  to  the  value  of  $17,463,998 ; 

!  and  there  was  sold  and  shipped  from  the  State 
i  of  Massachusetts  alone,  boots  and  shoes  of  an  es- 
i  timated  value  of  $55,000,000 — total  $72,463,998, 
j  which  large  sum  represents  very  imperfectly, 
but  yet  most  strikingly,  the  extent  to  which  the 
value  of  the  hides  became  enhanced  by  the  pro¬ 
cess  of  manufacturing,  and  also  the  remuneration 
which,  through  such  enhancement,  necessarily 
accrued  to  labor,  inasmuch  as  the  increased  value 
in  question  represents  to  a  greater  degree  than 
in  most  manufactures  the  amount  paid  directly 
to  labor. 

As  might  be  inferred  from  this  showing,  the 
United  States  continues  to  purchase  hides  from 
Buenos  Ayres,' and  continues  to  add  to  her  wealth 
and  to  the  sources  of  employment  for  her  people 
by  so  doing;  but  in  thus  purchasing  we  find 
j  that  the  United  States  stands  on  a  different 
j  footing  from  other  commercial  nations;  or  in 
other  words,  has  a  way  of  doing  things  peculiar 
to  herself.  Let  us  see  how  this  is: 

The  Argentine  Republic,  in  sending  hides, 
goat  skins,  and  horse-hair  to  the  United  States, 
requires  an  equivalent.  It  has  no  forests,  few 
manufactures,  and  an  insufficient  supply  of  bread- 
stuffs.  It  therefore  requires  lumber,  flour,  tex- 
j  tile  fabrics,  especially  coarse  cottons  and  calicoes, 
readymade  clothing,  furniture, wagons,  hardware, 
saddlery,  paints,  paper,  &c.,  all  products  which 
the  United  States  is  capable  of  producing  in  un¬ 
limited  quantity,  and  is  desirous  of  selling.  The 
people  of  the  Argentine  Republic,  furthermore, 
do  not  desire  payment  for  these  products  in  the 
precious  metals,  and  if  obliged  to  receive  them 
must  immediately  exchange  them  for  the  above- 
named  commodities,  which  are  absolutely  essen¬ 
tial  to  their  existence  as  a  civilized  people.  Now, 
as  the  United  States  stands  to  the  Argentine 
Republic  in  the  relation  of  almost  their  best  cus¬ 
tomer,  and  as  the  two  nations  are  further  assimi¬ 
lated  through  continental  position  and  a  common 
form  of  government,  and  as  the  former  is  capable 
and  desirous  of  supplying  those  commodities 
which  the  latter  especially  needs,  it  might 
naturally  be  supposed  that  the  trade  between- 
the  two  would  be  reciprocal.  The  exact  contrary 
is,  however,  the  case.  The  United  States,  year 
by  year,  increases  its  purchases  from  the  Ar¬ 
gentine  Republic,  while  the  amount  of  domestic 
products  which  the  latter,  in  turn,  purchases 
from  the  former  increases  very  slowly,  or  remains 
altogether  stationary.  Thus,  during  the  year 
1866 — the  latest  of  which  we  have  exact  re¬ 
turns — the  United  States  increased  the  value  of 
its  imports  from  the  Argentine  Republic  to  the 
extent  of  20  per  cent,  over  the  values  of  any  pre¬ 
ceding  year,  but  increased  its  exports  during 


35 


the  same  period  to  the  same  country  only  two 
per  cent.*  During  the  same  year,  however, 
Great  Britain  increased  her  exports  to  the  Ar¬ 
gentine  Republic  46  per  cent.,  France  65  per 
cent.,  and  Germany  26  per  cent.  Now  this  re¬ 
sult  is  due,  not  to  any  unwillingness  on  the  part 
of  the  people  of  the  Argentine  Republic  to  pur¬ 
chase  of  the  United  States,  but  simply  and  solely 
to  the  fact  that  the  prices  of  all  commodities  in 
the  United  States  are  so  much  higher  than  in  all 
other  markets  of  the  world  that  reciprocal  trade 
is  disadvantageous  and  impossible.  The  United 
States,  therefore,  unable,  as  before  shown,  to  dis¬ 
pense  with  the  productions  of  Buenos  Ayres,  and 
i  unable  to  pay  for  the  same  in  the  products  of  its 
own  industry,  settles  the  balance  of  trade,  not 
by  sending  gold  and  silver  directly  to  Buenos 
Ayres,  but  by  purchasing,  in  the  first  instance, 
bills  of  exchange  on  England,  paying  a  banker’s 
7  profit,  and  probably  effecting  such  purchase  to  a 
greater  or  less  extent  by  selling  at  a  discount  the 
nation’s  obligations  of  indebtedness.  The  debt 
thus  transferred  to  Great  Britain  is  settled  by  the 
exportation  to  Buenos  Ayres  of  British  manu¬ 
factures,  paying  another  profit,  and  in  British 
vessels,  paying  freights  and  commissions.  And 
this  process  goes  on  month  after  month  and  year 
after  year,  until  the  continued  and  unnatural 
drain  of  the  precious  metals  and  the  continual 
exportation  of  bonds  having  become  startling,  it 
is  gravely  proposed  to  reverse  the  order  of  things 
by  making  the  taxation  a  little  higher ;  or,  com¬ 
ing  down  to  particulars,  having  as  a  nation  the 
most  perfect  machinery  for  manufacturing  boots 
and  shoes,  and  the  most  skilled  workmen  for  the 
management  of  such  machinery,  we  propose  to 
continue  to  neutralize  these  benefits  and  prevent 
the  people  of  other  countries  from  supplying 
themselves  in  our  markets ;  first,  by  imposing  a 
tax  of  10  per  cent,  on  the  imported  hides,  of 
which  we  cannot  produce  a  supply  sufficient  for 
our  requirements  for  leather  ;  20  per  cent,  on  the 
lumber  of  which  we  build  the  shoemaker’s  shop, 
thereby  augmenting  his  rent;  2%  cents  per 
pound  on  the  hammer  with  which  he  drives  his 
pegs ;  40  per  cent,  on  the  thread  with  which  he 
sews:  $1  25  per  ton  on  the  coal  with  which  he 
warms  himself ;  20  per  cent,  on  the  flour  from 
which  his  bread  is  made  ;  25  cents  per  bushel  on 
his  potatoes ;  $2  per  barrel  on  the  fish  which  he 
may  eat  on  Friday,  if  perchance  any  of  these  ar¬ 
ticles  are  imported ;  and  then,  when  the  shoe  is 
completed,  let  the  shoemaker  charge  back,  in 
turn,  all  these  taxes,  and  something  additional 
as  a  consideration  for  paying  them,  to  the  sailor, 
the  lumberman,  the  carpenter,  the  iron  worker, 
wie  i^eaver,  the  spinner,  the  farmer,  and  the  fish¬ 
erman,  and  if  any  profit  on  the  transaction  is  re¬ 
alized,  let  him  then  convert  this  into  a  certificate 
of  national  indebtedness,  and  exchange  it  at  a 
discount  with  the  Chinaman,  the  Cuban,  and  the 
Brazilian,  for  his  tea,  his  sugar,  and  his  coffee. 
If  the  country  does  not  prosper  and  increase  in 
wealth  under  this  condition  of  things,  it  is  not 
because  it  has  not  fully  tried  the  experiment. 


INFLUENCE  OF  STATE  AND  LOCAL  TAXATION  ON  TIIE 
COST  OF  PRODUCTION. 

In  reviewing  the  several  causes  which,  through 
the  enhancement  of  the  cost  of  production,  and 
consequently  of  prices,  tend  to  prevent  the  pro¬ 
ducts  of  American  industry  from  exchanging  on 
terms  of  equality  in  foreign  markets  with  the 
products  of  competing  manufacturing  and  com 
mercial  nations,  the  influence  of  State  and  local 
taxation  should  not  be  overlooked.  The  space 
available  in  this  report  is,  however,  too  limited 
to  allow  of  much  discussion  on  this  subject,  fur¬ 
ther  than  to  point  out  and  illustrate  the  fact  that 
while  in  Great  Britain,  France,  Belgium,  and 
Prussia,  especial  care  is  taken  that  the  incidence 
of  local  taxation  shall  not  increase  the  cost  of 
manufactures,  or  of  the  commercial  transactions 
involved  in  the  movement  of  the  finished  pro¬ 
ducts  of  industry  to  a  market;  in  the  United 
States,  on  the  contrary,  up  to  the  present  time, 
it  has  been  considered  desirable  rather  than  oth¬ 
erwise  to  impose  upon  the  capital  especially  em¬ 
ployed  in  manufacturing  as  large  a  proportion  of 
the  burden  of  local  taxation  as  practicable.  It 
is,  therefore,  conclusive  that  to  the  extent  of  this 
difference  the  American  producer  must  enter  the 
foreign  market  at  a  disadvantage,  for  which  there 
can  be  no  direct  compensation ;  and  that  as  re¬ 
gards  the  home  market  he  has  need  and  claim 
for  a  corresponding  measure  of  protection,  to 
which  there  cannot,  in  fairness,  be  any  legiti¬ 
mate  opposition.  How  this  condition  of  inequal¬ 
ity  operates  as  a  bar  to  national  progress  and 
development  may  be  practically  shown  by  an 
example. 

Let  us  suppose  the  projection  of  a  new  line  of 
steamships  to  run  between  New  York  and  Eu¬ 
rope  in  competition  with  existing  lines,  now  con¬ 
trolled  by  foreign  capitalists  and  registered  un¬ 
der  a  foreign  flag.  If  the  nationality  of  the  com¬ 
pany  is  to  be  American,  and  its  location  New 
York,  the  State,  county,  and  city  of  New  York 
would  have  levied  during  the  past  year  on  the 
whole  accessible  capital  of  the  company — in  the 
form  of  vessels,  wharves,  machine  shops,  offices, 
and  floating  capital — a  tax  of  2.62  per  cent.  Be¬ 
yond  this  the  national  government  would  impose 
an  average  duty  under  the  tariff  on  all  articles  of 
foreign  growth  and  importation  used  in  the  ves¬ 
sels  of  the  line  of  48  per  cent. ;  on  the  gross  re¬ 
ceipts  from  passengers,  of  2^  Per  cent.,  and  on 
the  profits  or  dividends  of  the  company,  (if  per¬ 
chance  there  should  be  any,)  an  income  tax  of  5 
per  cent.  If  now,  on  the  other  hand,  the  status 
of  the  company  is  made  foreign,  and  its  location 
fixed  at  Liverpool,  the  whole  amount  of  local  tax¬ 
ation  to  which  the  company  would  be  subject 
would  be  merely  an  assessment  to  the  extent  of 
from  10  to  25  per  cent,  on  the  rental  value  of  the 
premises  occupied  either  as  offices,  storehouses, 
or  machine  shops.  Beyond  this  the  British  gov¬ 
ernment  would  have  levied,  in  the  year  1867,  an 
income  tax  on  the  profits  of  the  individual  stock¬ 
holders  or  owmers,  of  four  pence  on  the  pound 
sterling,  equivalent  to  If  per  oent. ;  and  omitting 


*  It  may  also  be  noted  that  no  small  part  of  what  is  credited  at  Buenos  Ayres  to  exports  from  the  United  States  was  really  lum¬ 
ber  shipped  on  board  of  American  vessels  at  ports  of  the  British  provinces,  and  was  not,  in  any  sense  American  product. 


36 


all  other  forms  of  direct  taxation  would  have  al' 
lowed  all  articles  of  foreign  growth  and  produc¬ 
tion,  such  as  sugars,  tea,  coffee,  wines,  and  to¬ 
bacco,  which  might  be  required  for  use  on  board 
the  steamers  in  question  to  be  taken  from  bond 
free  of  duty.  The  difference  in  the  return  on  the 
investment,  therefore,  growing  out  of  the  differ¬ 
ence  merely  in  the  fiscal  systems  recognized  in 
the  different  localities  specified,  would  be  of  itself 
sufficient  to  afford  to  the  foreign  capitalist  a  div¬ 
idend  on  his  stock  nearly  or  quite  equal  to  the 
ordinary  rate  of  European  interest  on  the  capi¬ 
tal  employed,  while  to  the  American  investor  the 
disadvantage  would  have  an  expression  two-fold 
greater,  through  the  increase  of  expenses  and 
the  diminution  of  profit.  With  competition, 
therefore,  with  foreign  nations  on  terms  of  equal¬ 
ity,  being  thus  from  the  very  outset,  by  our  own 
acts,  rendered  impossible,  the  failure  or  slow 
growth  of  American  steamship  enterprizes  be¬ 
comes  no  longer  a  mystery. 

If  we  select  as  another  example  the  manufac¬ 
ture  of  cotton  in  Great  Britain  and  the  United 
States,  respectively,  we  find  that  in  the  former 
country  the  incidence  of  all  local  or  other  direct 
taxation  extends  only  to  the  rental  value  of  the 
buildings  for  the  reception  of  machinery  or  the 
promotion  of  other  details  of  the  business,  and 
does  not  in  any  way  regard  the  value  of  the  ma¬ 
chinery  which  may  be  placed  in  such  buildings, 
or  the  capital  employed  in  its  workings.  On  the 
other  hand,  in  the  United  States  the  incidence  of 
local  taxation  falls  on  everything  connected  with 
the  business  of  cotton  manufacture  that  is  acces¬ 
sible,  viz.,  buildings,  land,  and  machinery;  and 
is,  moreover,  not  unfrequently  duplicated  in  the 
following  manner:  thus,  factories  are  often  built 
in  this  country  under  acts  of  incorporation  in 
one  State,  while  the  stock  is  held  or  owned 
chiefly  in  other  States.  The  municipality  in 
which  the  factory  is  located  taxes  the  building 
and  machinery,  and  collects  the  tax  of  the  corpo¬ 
ration  ;  the  municipality,  on  the  other  hand,  in 
which  the  stockholder  resides  taxes  the  stock  to 
him  at  its  market  value  as  personal  property, 
thus  duplicating  the  tax  on  identically  the  same 
property,  and  leaving  its  owner  no  remedy.  In 
one  instance,  (and  that  not  an  exceptional  one,) 
brought  to  the  notice  of  the  Commissioner,  the 
aggregate  of  these  local  taxes  imposed  on  a  par¬ 
ticular  corporation  amounted,  in  1866,  to  4  9-10 
per  cent,  upon  the  capital  invested,  and  in  1868, 
to  over  four  per  cent.  But  vicious  as  this  sys¬ 
tem  is  upon  its  face,  its  effect,  especially  in  a  na¬ 
tional  point  of  view,  cannot  be  realized  until  we 
take  into  consideration  the  fact  that  the  capital 


required  in  the  United  States  to  build  a  cotton 
mill  is  about  double  the  amount  required  for  a 
similar  purpose  in  Great  Britain.  Four  per 
cent.,  therefore,  on  the  capital  of  a  cotton  mill  in 
the  United  States  represents  eight  per  cent,  on 
the  same  productive  power  in  Great  Britain,  or 
a  rate  which  is  almost  double  the  average  rate 
of  interest  in  the  latter  country.  It  is,  there¬ 
fore,  clear  that  American  manufacturers,  engaged 
in  cotton  and  other  industries  similarly  affected, 
absolutely  need  a  measure  of  protection  in  re¬ 
spect  to  this  one  item  alone,  in  order  to  enable 
them  to  compete  successfully  even  in  the  domes¬ 
tic  markets  against  these  foreign  competitors. 

blow,  if  the  United  States  proposes  to  main¬ 
tain  and  extend  its  foreign  commerce,  an  attain¬ 
ment  indispensable  to  national  greatness,  and  to 
hold  and  exert  that  influence  throughout  the  civ¬ 
ilized  world  which  its  continental  dominion,  its 
population  and  wealth  should  entitle  it,  it  must 
place  itself  on  an  equality  as  regards  the  condi¬ 
tions  of  production  with  other  competing  na¬ 
tions.  And  a  timely  consideration  of  the  influ¬ 
ence  of  this  local  taxation  on  prices  and  national 
development  is  therefore  most  important.  The 
remedy  for  the  objectionable  features  which 
characterize  the  existing  system  is  probably  to 
be  found  in  a  re-adjustment,  rather  than  a  re¬ 
duction  of  taxation,  although  in  respect  to  this 
latter  point  much  can  undoubtedly  be  accom¬ 
plished  by  the  exercise  of  economy  and  wise  ad¬ 
ministration. 

The  burden,  in  any  event  we  may  be  certain, 
will  be  heavy,  but  in  proportion  as  it  is  so,  it  is 
all  the  more  important  to  consider,  whether  we 
will  place  it  squarely  on  the  back  rather  than 
hang  it  to  the  neck  or  suspend  it  from  the  ex¬ 
tremities. 

Furthermore,  it  must  not  be  imagined  that  the 
local  taxation  of  England  or  France  is  inconsid¬ 
erable.  On  the  contrary,  it  is  heavy.  T\ius,  for 
the  year  1867,  the  aggregate  amount  of  local 
taxation  for  England  and  Wales  was  £18,367,773, 
sterling,  ($89,610,000,)  which  amount,  if  we  ex¬ 
cept  such  anomalies  as  the  taxation  of  some  of 
our  large  cities,  that  for  the  city  of  New  York 
the  present  year  being  in  excess  of  $22,000,000, 
will  not  prove  unfavorably  disproportionate  to 
the  average  of  the  United  States.*  This  amount 
in  England  and  Wales  is  raised  almost  wholly  by 
a  system  which  makes  the  rental  value  of  real 
estate  the  basis  of  taxation,  it  being  assumedtliat 
the  rental  value  of  houses  occupied  affords  a  bet¬ 
ter  measure  of  a  man’s  income  and  ability  to  pay 
taxes  than  any  other  standard  which  can  be 
adopted,  f  ~  ^  t 


*  Hecent  parliamentary  returns  show  that  the  local  taxation  of  England  and  Wales  has  increased  since  1837  nearly  ICO  per  cent, 
the  taxes  for  the  relief  of  the  poor  having  increased  from  $20,220,000  in  1837  to  $32,51)5,000  in  1867,  while  the  county  rates,  winch  in 
1837  were  $5,840,000,  had  advanced  to  $16,715,000  in  1867  •  The  total  local  taxation  ot  the  city  or  London  is  reported  at  $17.50t.000, 
fnade  of  the  following  items:  l’oor  rates  $6,250,000,  local  rates,  $5,000,000,  drainage,  lire  brigade,  lighting,  Ac.,  $3, 750, too  , and 
police  $2,5o0,000.  ,* 

The  j  early  expenses  of  the  city  of  Paris  for  municipal  purposes  are  reported  to  be  at  present  about  $50,000,060,  of  which 
$20,000,000  is  raised  by  what  are  known  as  octroi  duties.  It  should,  however,  be  remarked  that  this  enormous  taxation  is  due  in 
a  great  measuie  to  a  reconstruction,  as  it  were,  of  the  city  under  the  auspices  of  the  Imperial  government.  The  rental  taxes, 
moreover,  are  in  all  cases  paid  by  tlie  “  occupier  as  owner  or  tenant.” 

t  As  showing  the  working  of  this  system  of  taxation,  we  present  herewith  the  local  taxes  actually  levied  for  the  year  1866  in  St. 
Mary  lebone,  one  of  the  largest  ol  the  parishes  of  the  metropolitan  district  of  London  . 

£  s.  d. 

Poor  rate-  . 02  2>£  on  the  pound  of  rental  value. 

Genera)  rate,  (street  lighting,  watering,  paving,  &c.)  -  -  0  0  11  on  the  pound  of  rental  value. 

1-ewer  rate . 004  on  the  pound  ot  rental  value. 

Church  rate  0  0  1  on  the  pound  ot  rental  value. 

Metropolitan  main  draining  rate  ......  o  0  4  on  the  pound  of  rental  value. 


3  10K 


37 


In  France  the  revenues  for  local  and  municipal 
expenditures  are  derived  in  a  great  degree  from 
what  is  termed  the  personal  and  property  tax. 
The  first  of  these  is  in  the  nature  of  a  poll  tax, 
and  is  estimated  at  the  average  value  of  three 
days’  labor,  which  cannot,  however,  be  rated  un¬ 
der  50  centimes  or  above  1  franc  50  centimes ; 
in  other  words,  this  annual  tax  varies  from  1 
franc  50,  (30  cents,)  the  lowest,  to  4  francs  60, 
(90  cents,)  the  highest.  It  is  the  only  tax  levied 
on  the  individual  in  France,  and  includes  every 
inhabitant,  native  or  foreign,  male  or  female,  not 
a  pauper. 

I  The  French  property  tax  falls  on  “  tenant  oc- 
cupany,”  and  is  usually  fixed  at  about  one-twen¬ 
tieth  part  of  the  rent  paid  by  each  resident,  but 
only  for  the  portion  of  the  building  which  serves 
as  a  residence.  It  has  regard  to  the  rent  really 

7  paid,  and  if  the  individual  resides  in  his  own 
house  he  is  taxed  to  the  amount  which  would  be 
payable  if  the  apartments  he  occupies  were  leased 
to  a  tenant. 

It  is  also  curious  to  note  that,  going  back  to 
the  commencement  of  the  seventeenth  century, 
we  find  the  same  system  of  indiscriminate  State, 
local  and  municipal  taxation  at  present  existing 
in  the  United  States  was  recognized  both  in 
France  and  Great  Britain.  Experience,  however, 
has  gradually  brought  to  them  that  reform  which 
probably  at  no  distant  day  will  also  be  entered 
upon  in  this  country.  It  would  be  difficult,  how¬ 
ever,  to  find  in  the  ancient  records  referred  to 
anything  of  greater  inconsistency  than  is  exhib¬ 
ited  in  the  existing  legislation  of  some  of  our 
States ;  as,  for  example,  in  the  State  of  New 
York,  in  which  the  statute  holds,  as  respects  its 
own  citizens,  that  personal  property  follows  per¬ 
sonal  residence,  and  exactly  the  reverse  in  re¬ 
spect  to  foreigners  and  citizens  of  other  States. 
A  citizen  of  the  United  States  not  a  resident  of 
New  York  is  therefore  liable  to  double  taxation 
in  respect  to  all  capital  invested  in  business  or 
banking  in  New  York:  first,  by  virtue  of  the  lo¬ 
cation  of  the  property ;  aud  secondly,  in  virtue 
of  the  residence  of  the  owner  in  some  other  State. 
One  suggestion,  in  view  of  these  facts  and  cir¬ 
cumstances,  may  be  pertinent,  which  is,  that  if 
any  State  should  determine  to  adopt  a  system  of 
local  taxation  analogous  to  that  recognized  in 
Great  Britain  or  France,  it  might  confidently  an¬ 
ticipate  a  very  large  influx  of  capital  and  manu¬ 
factures  from  beyond  its  borders,  thereby  rapid¬ 
ly  increasing  its  wealth  and  development,  and 
possibly  as  an  ultimate  result,  compelling  other 
States  to  adopt  the  same  liberal  and  enlightened 
piolicy  as  a  measure  of  defence  and  protection. 

FUTURE  FINANCIAL  POLICY. 

Having  thus  presented,  in  part,  the  evidence 
which  demonstrates  the  rapid  developement  of 
t*e  country,  and  having  also  endeavored  to  deter¬ 
mine  and  analyze  the  causes  which  at  the  same 
time  tend  to  check  or  interfere  with  such  develop¬ 


ment,  we  are  now  prepared  to  take  up  and 
intelligently  consider  the  lesson  to  be  deduced 
from  these  investigations  relative  to  the  inquiry 
proposed  in  the  outset,  viz.,  what  policy  of  legis¬ 
lation  is  likely  to  prove  hereafter  most  advan¬ 
tageous  to  the  revenue,  aud  most  certain  to 
establish  the  credit  and  industry  of  the  whole 
country  on  a  sound  and  substantial  basis. 

It  seems  clear  that  whatever  fiscal  policy  may 
be  proposed  for  adoption,  it  must  not  only  recog¬ 
nize  and  be  based  on  the  existing  condition  of 
affairs,  but  must  be  also  in  the  nature  of  an 
amendment  which  shall  to  the  smallest  extent 
possible  partake  of  the  character  of  an  experi¬ 
ment.  Violent  change,  uncertainty,  and  instabil¬ 
ity  are,  of  all  things,  what  the  business  interests 
of  the  country  have  most  reason  to  dread,  while, 
on  the  other  hand,  the  determination  and  recog¬ 
nition  of  a  clear,  well-defined,  and  practical  issue, 
to  be  attained  to  by  a  certain  progressive,  even 
though  slow,  movement,  is  sure  to  bring  with  it 
stability,  hope,  and  confidence  in  the  future — the 
elements  which  constitute  in  no  small  degree  the 
basis  of  both  private  and  national  prosperity. 
Can  such  a  policy  be  determined  ?  Can  such  an 
issue  be  consummated  ? 

The  ends  to  be  attained  are,  mainly,  three : 
first,  full  restoration  of  the  national  credit  and  re¬ 
sumption  of  specie  payments  ;  second,  refunding 
the  national  debt  at  a  lower  rate  of  interest ;  third, 
reduction  of  the  cost  of  national  production,  with  a 
view  of  enabling  the  products  of  American  industry 
to  compete  on  terms  of  greater  equality  with  the  pro¬ 
ducts  of  foreign  nations  than  is  now  possible,  thereby 
establishing  a  system  of  national  protection  and 
insuring  stability,  increased  product,  and  a  re¬ 
development  of  American  commerce  and  ship¬ 
building. 

Let  us  now  inquire  what  elements  are  ready  at 
hand  for  the  accomplishment  of  these  results. 
The  nation  at  present  is  excessively  in  debt,  and 
is  further  embarrassed  with  the  volume  of  its 
matured  and  suspended  paper.  To  free  itself 
from  embarrassment  and  to  redeem  its  suspended 
paper,  there  would  seem  to  be  but  the  one  method, 
which  is  alone  available  to  individuals  under 
similar  circumstances,  viz.,  to  manage  in  some 
way  to  receive  more  than  is  expended,  and  to 
apply  the  surplus  of  receipts  over  expenditures  to 
the  payment  of  debts  and  to  the  restoration  of 
credit. 

The  determination  of  the  probability  of  obtain¬ 
ing  such  a  surplus,  and  also  its  possible  extent, 
involves  the  consideration  of  the  national  finances, 
present  and  prospective,  and  to  this  attention  is 
next  invited. 

NATIONAL  RECEIPTS  AND  EXPENDITURES  FOR  THE 
FISCAL  YEAR  ENDING  JUNE  30,  1868. 

The  accounts  of  the  national  treasury  for  the 
fiscal  year  ending  June  30,  1868,  show  an  aggre¬ 
gate  of  receipts  of  $405,638,083  32,  and  of  expend¬ 
itures  of  $377,340,284  86,  leaving  a  balance  to 


These  rates,  which  are  probably  among  the  highest  levied  in  Great  Britain  for  municipal  or  local  purposes,  would  in  the  aggregate 
be  equivalent  to  nearly  twenty  per  cent.  (19  37)  of  the  annual  rental  value  of  the  real  estate  liable  to  taxation.  It  will  be  ob¬ 
served  that  the  highest  single  item  in  the  account  is  that  known  as  the  “poor  rate.” 

It  should  also  be  stated  that  in  this  system  of  rental  taxation  the  rate  is  levied  only  on  real  estate  occupied  and  having  a 
rental  valuation  ;  and  that  government  property  also  of  certain  descriptions  does  not  enjoy  the  privilege  of  exemption  as  in  the 
United  States,  from  local  taxation.  *  1 


38 


the  credit  of  surplus  income  of  $28,297,798  46. 
In  this  statement  the  bonds  issued  to  the  Pacific 
railroads  are  not  included,  such  issue,  at  least  for 
the  present,  being  regarded  as  a  loan  of  credit, 
rather  than  a  direct  expenditure. 

For  a  more  detailed  statement  of  the  receipts 


and  expenditures  of  the  treasury  of  the  United 
States  for  the  fiscal  year  ending  June  30,  1868, 
together  with  the  general  result  of  the  payment 
or  refunding  of  the  various  species  of  national 
indebtedness  during  the  same  period,  reference  is 
made  to  the  balance-sheet  submitted  on  page  39.* 


*  The  expense  of  collecting  the  revenue,  both  “  internal”  and  “  customs”  for  the  last  three  fiscal  years,  is  shown 
by  the  following  statement : 

The  percentage  of  entire  expenditures  of  the  Internal  Revenue  Bureau,  including  cost  of  assessment,  collection, 
office  expenditures,  &c,  to  net  receipts,  during  the  fiscal  year  ending  June  30,  1866,  was  2.49  per  cent.  ;  1867,  3.41 
per  cent.  ;  1868,  4.94  per  cent. 

The  expenses  attending  the  collection  of  the  revenue  from  the  customs  during  the  same  years  were  as  follows  : 


Fiscal  years. 

Custom  receipts. 

Cost  of  collec¬ 
tion. 

Percentage  of 
cost  to  re¬ 
ceipts. 

$53,187,612 

102,316,153 

$3,324,431 

4,146,585 

5,356,458 

5,738,971 

6.25 

4.05 

179,046,652 

2.94 

1867  . 

176,417,811 

164,464,599 

3.25 

a7, 615, 675 

4.63 

Total «  . , T  T  T . . . 

675,432,727 

26,182,120 

3.88 

a  The  increase  in  expenditures  for  the  collection  of  customs  for  the  fiscal  year  1868,  was  due  mainly  to  the 
reorganization  of  the  custom  service  at  the  South,  to  the  increase  of  salaries  of  officers,  and  to  the  increase  of 
expenses  incurred  for  the  prevention  of  smuggling. 


Ji 


RECEIPTS  AND  EXPENDITURES  OF  NATIONAL  TREASURY  FROM  JULY  1,  1867,  TO  JUNE  30, 


39 


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*  This  amount,  as  given  by  the  Commissioner  of  Internal  Revenue,  shows  a  difference  from  the  figures  reported  by  the  Treasurer  and  given  above,  and  is  due  to  the 
fact  that  the  same  receipts  are  not  entered  upon  the  books  of  the  two  offices  upon  the  same  day. 


40 


NATIONAL  RECEIPTS  AND  EXPENDITURES  FOR  THE 
CURRENT  FISCAL  YEAR  ENDING  JUNE  30,  1869. 
For  the  current  fiscal  year  ending  June  30, 
1869,  the  Commissioner  estimates  the  receipts  of 
the  national  treasury*  as  follows  : 


From  customs .  $170,000,000  00 

From  internal  revenue .  155,000,000  00 

From  public  lands .  1,700,000  00 

From  miscellaneous  sources .. .  30,000,000  00 


Total .  356,700,000  00 


The  total  expenditures  for  the  same  period,  in" 
eluding  $7,200,000  gold  paid  for  Alaska,  are  es¬ 
timated  by  the  Secretary  of  the  Treasury  as  fol¬ 
lows  : 

Civil  and  miscellaneous,  (inclu¬ 
ding  $7,200,000  for  Alaska). . .  $61,227,106  00 
War  Department,  (including 


bounties) .  93,219,117  00 

Navy  Department, .  21,704,785  00 

Pensions  and  Indians .  30,358,648  00 

Interest  on  public  debt .  129,742,814  00 


336,152,470  00 

The  estimates  of  total  expenditure  for  the 
above  period  as  made  by  the  Commissioner  are 
somewhat  less  than  those  presented  by  the  secre¬ 
tary,  viz  :  $326,300,000,  (a  reduction  of  about  ten 
millions,)  and  indicating  a  surplus  of  receipts  for 
the  fiscal  year  ending  June  30,  1869,  according 
as  one  or  the  other  of  the  above  estimates  is  ac¬ 
cepted,  of  from  twenty  to  thirty  millions.  And  it 
is  especially  to  be  noted  that  the  surplus  actually 
attained  during  the  last  fiscal  year,  and  the  one 
predicted  for  the  current  year,  are  on  the  basis  of 
a  system  of  revenue  administration,  which,  to  use 
a  very  mild  expression,  has  been  exceedingly  im¬ 
perfect. 

NATIONAL  RECEIPTS  AND  EXPENDITURES  FOR  THE 
FISCAL  YEAR  ENDING  JUNE  30,  1870. 

Let  us  now  look  forward  to  the  fiscal  year 
commencing  July  1,  1869,  and  ending  June  30, 
1870,  the  first  complete  year  of  a  new  adminis¬ 
tration  ;  and  starting  with  the  relation  of  receipts 
and  expenditures  as  above  shown  to  exist,  in¬ 
quire  what  it  is  further  possible  or  practicable  to 
accomplish.  Such  a  basis  allows  us  to  anticipate 
a  surplus  of  thirty  millions  for  the  year  under 
consideration,  with  the  law  and  the  administra¬ 
tion  of  the  law  in  relation  to  the  collection  and 
expenditure  of  revenue  remaining  unaltered; 
and  this  surplus,  the  Commissioner  has  reason  to 
believe,  may  be  increased  through  the  follow¬ 
ing  agencies : 

First.  From  the  certain  a.ncl  continued  gain 
which  will  undoubtedly  accrue  to  the  national  reve¬ 
nue  under  any  circumstances,  from  the  continued  in¬ 
crease  of  the  wealth  and  ‘population  of  the  country. 
The  amount  of  such  increase  in  Great  Britain,  for 


the  six  years  prior  to  the  year  1865-66,  is  esti¬ 
mated  to  have  averaged  £1,780,000  ($8,900,000) 
per  annunf.  The  data  for  arriving  at  this  esti¬ 
mate  in  Great  Britain,  viz.,  a  comparison  of  an¬ 
nual  receipts,  are  not,  however,  at  present  avail¬ 
able  in  the  United  States,  as  the  aggregate  of 
taxation  in  the  latter  has  been  materially  affected 
by  legislation  for  nearly  every  year  since  the  in¬ 
auguration  of  the  internal  revenue  system.  Nev¬ 
ertheless,  it  cannot  be  doubted  that  the  yearly 
gain  from  this  source  is  very  considerable,  inas¬ 
much,  as  in  no  year  since  the  commencement  of 
the  reduction  of  the  internal  revenue  taxes  have 
the  aggregate  receipts  of  revenue  been  dimin¬ 
ished  to  an  extent  commensurate  with  the  corres¬ 
ponding  reduction  or  abatement:of  taxation.  Ta¬ 
king  this  fact  into  consideration,  and  also  the 
fact  established  by  the  census  returns  of  the  two 
countries,  viz.,  that  the  annual  rate  of  increase 
in  the  value  of  real  and  personal  property  in  the 
United  States  is  considerably  greater  than  that 
of  Great  Britain,  the  Commissioner  believes  he  is 
warranted  in  assuming  that  the  gain  of  revenue 
likely  to  accrue  from  the  increase  in  the  wealth 
and  population  of  the  United  States  will,  for  the 
preseht,  be  at  least  $10,000,000  per  annum. 

Second.  A  gain  to  the  credit  of  the  treasury  from 
the  discontinuance  of  payment  through  settlement  of 
the  claims  of  soldiers  and  soldiers  for  arrears  of 
pay  and  bounty. 

This  gain,  as  predicated  on  the  payments  actu¬ 
ally  made  under  these  heads  during  the  last  and 
current  fiscal  years,  may  be  estimated  at  $25,- 
000,000* 

Third.  A  gain  from  a  further  general  reduction 
of  national  expenditures. 

This  gain  for  the  next  fiscal  year  through  a 
continued  reduction  of  the  army,  reconstruction 
and  pacification  of  the  southern  States,  and  a 
greater  economy  in  civil  expenditures,  and  in  the 
appropriations  annually  made  for  fortifications, 
ordnance  stores,  rivers  and  harbors,  and  private 
claims,  ought  to  aggregate  at  least  $30,000,000  ; 
especially  if  the  amount  paid  during  the  current 
fiscal  year  for  the  purchase  of  foreign  territory 
($7,200,000,  gold)  be  carried  to  the  credit  of  this 
account. 

If  we  should  adopt  the  estimates  of  reduction 
of  expenditure  which  the  Secretary  of  the  Treas¬ 
ury  has  stated  in  his  last  report  (December,  1868) 
to  be  practicable,  the  amount  to  be  carried  to 
the  credit  of  surplus  income  from  a  reduction  of 
expenditures  Avould  be  nearer  $50,000,000  than 
$30,000,000,  as  above  assumed  by  the  Commis¬ 
sioner.  Under  this  head  the  Secretary  says  : 

“  There  is  no  department  of  the  government  which  is 
conducted  with  proper  economy.  The  average  expenses 
of  the  next  10  years,  for  the  civil  service,  ought  not  to 
exceed  $40,000,000  per  annum.  Those  of  the  War  De¬ 
partment,  after  the  bounties  are  paid,  should  be  brought 
down  to  $35,000,000,  and  those  of  the  navy  to  $20,000,- , 
000.  The  outlays  for  pensions  and  Indians  cannot  for 


1. 


T 


*  The  total  amount  disbursed  to  soldiers  aDd  sailors  for  arrears  of  pay  and  bounties  since  July  1, 1S66,  is  believed  to  be  approxi* 
mately  as  follows: 

For  Fiscal  year  1866-67,  bounties . .  $11,882,859  85 

For  Fiscal  year  1867-’68  .  43,476,549  48 

First  four  months  of  fiscal  year  1868-’69 . 13,4iojl42  77 

The  balance  of  claims  for  back  pay  and  bounties  yet  unsettled  (December,  1863)  arc  estimated  at,  approximately  $15,000,000.  but 
it  is  not  probable  that  claims  will  be  allowed  to  this  amount. 


41 


some  years  be  considerably  reduced,  but  they  can  doubt¬ 
less  be  brought  within  $30,000,000.  The  interest  on  the 
public  debt,  when  the  whole  debt  shall  be  funded,  at  an 
average  rate  of  interest  of  five  .per  cent.,  will  amount 
to  $125,000,000,  which  will  be  reduced  with  the  annual 
reduction  of  the  principal.” 

Pensions.  In  looking  forward,  furthermore,  to 
the  relation  which  in  the  future  the  national  re¬ 
ceipts  are  to  sustain  to  the  national  expendi¬ 
tures,  it  should  be  borne  in  mind  that  although 
the  amount  now  annually  paid  by  the  government 
for  pensions  is  very  large,  (approximating  $25,- 
000,000  per  annum,)  and  may  possibly  for  a  year 
or  two  longer  continue  to  increase,  yet  there  is 
.  nothing  more  certain  than  that  the  expenditure 
under  this  head  will  soon  begin  to  diminish.  In 
proof  of  his  we  have  only  to  refer  back  to  the 
past  expterience  of  the  government  in  regard 
to  this  matter.  Thus  we  find  that  in  1816, 
*  immediately  after  the  close  of  the  war  with 
Great  Britain,  the  amount  annually  disbursed 
for  pensions  was  $188,804;  which  increased 
in  four  years,  or  in  1820,  to  $3,208,000;  and  de¬ 
creased  in  the  next  eight  years,  or  in  1828,  to 
$850,573.  Again,  at  the  close  of  the  Mexican 
war  the  annual  pension  expenditure,  which  was 
$1,226,000  in  1848,  rose  in  1852  to  $2,431,000, 
and  declined  in  1861  to  $879,000.  If  we  argue, 
therefore,  from  the  past  experience  of  the  gov¬ 
ernment, it  will  be  safe  to  predict  that  in  the 
course  of  the  next  six  or  eight  years  the  annual 
amount  disbursed  for  pensions  will  be  reduced 
50  per  cent.,  thus  effecting  a  reduction  of  nation¬ 
al  expenditures  to  the  extent  of  from  $10,000,000 
to  $12,000,000  per  annum. 

Fourth.  Gain  from  reform  of  revenue  admin¬ 
istration. — But  in  addition  to  whatever  of  sur¬ 
plus  may  accrue  to  the  national  treasury  through 
the  agencies  above  cited,  a  very  large  increment 
of  receipts  can  also,  undoubtedly,  be  secured  by 
means  of  a  thorough  and  effective  reform  of  the 
administration  of  the  internal  revenue.  It  is 
useless  here  to  enter  into  any  discussion  as  to 
the  extent  of  the  losses  to  which  the  government 
is  annually  subjected,  through  the  positive  dis¬ 
honesty  or  gross  inefficiency  of  great  numbers  of 
the  subordinate  officials  intrusted  with  the  man¬ 
agement  of  this  branch  of  the  public  service ; 
but  that  such  losses  are  very  great  no  one  who 
has  given  the  subject  attention  can  have  the 
slightest  reason  to  doubt.  Assuming  $15 5,000, - 
000  as  the  annual  average  of  receipts  from  inter¬ 
nal  revenue,  as  the  law  and  its  administration 
now  stand,  the  Commissioner  believes  that  an 
inci*ease  of  $75,000,000  in  the  receipts  as  a  mini¬ 
mum  could  be  obtained  without  any  practical 
y  difficulty. 

On  the  other  hand,  as  an  offset  to  these  esti¬ 
mates,  we  may  have  a  reduction  of  treasury 
receipts  from  miscellaneous  sources — which  are 
largely  derived  from  the  premium  on  sales  of 
Igold — and  also  from  certain  unforeseen  expendi¬ 
tures.  But  allowing  for  all  these  contingencies, 
it  seems  possible  for  the  treasury  to  have  at  its 
command  at  the  close  of  the  next  fiscal  year  an 


available  surplus  of  from  $100,000,000  to  $125,- 
000,000 ;  and  with  such  elements  of  strength, 
there  is  not  a  single  fiscal  problem  of  our  imme¬ 
diate  future  which  will  not  be  greatly  aided  in 
its  solution.  The  Commissioner,  furthermore, 
maintains  that  the  realization  of  such  a  surplus 
involves  nothing  impractical,  and  nothing  which 
partakes  of  the  nature  of  an  experiment. 

It  requires,  however,  that  there  should  be 
unity  of  purpose  on  the  part  of  the  Executive,  of 
Congress,  and  of  the  people,  and  a  full  realiza¬ 
tion  of  the  fact  that  the  work  to  be  accomplished 
is  of  such  paramount  importance  that  nothing 
else  should  be  allowed  to  interfere  with  it.  It 
requires  that  the  agents  who  are  to  be  intrusted 
with  the  collection  and  disbursement  of  the  rev¬ 
enue  shall  be  appointed  on  some  other  grounds 
than  the  devotion  to  party  service,  the  length 
and  number  of  their  campaign  speeches,  or  the 
amount  of  money  contributed  to  aid  in  elections. 
It  requires  that  Congress  shall  exercise  the  most 
rigid  economy  in  respect  to  appropriations,  and 
that  the  sums  heretofore  expended  for  fortifica¬ 
tions,  rivers  and  harbors,  coast  survey,  new 
buildings,  the  manufacture  of  arms,  for  private 
claims  and  war  damages,  and  as  subsidies  to  rail¬ 
roads,  shall  constitute  no  precedent  for  the  im¬ 
mediate  future.  It  requires  that  no  more  money 
shall  be  disbursed  for  the  purchase  of  foreign 
territory,  and  that  no  reciprocity  treaty  shall 
be  negotiated  like  that  proposed  with  the  Sand¬ 
wich  Islands,  the  operation  of  which  is  calcula¬ 
ted  to  immediately  impair  the  revenue.'*  It  re¬ 
quires  that  there  shall  be  a  broad  distinction 
made  between  the  promotion  of  mere  private 
and  selfish  ends,  and  the  true  protection  of 
American  industry.  It  requires  that  we  shall 
stop  talking  about  the  letter  of  the  contract  in 
respect  to  the  payment  of  debts,  but  in  the  spirit 
of  the  same  honestly  determine  that  the  debts 
shall  be  paid.  With  these  requisitions  supplied, 
the  extrication  of  the  nation  from  its  financial 
embarrassments  and  the  attainment  of  great  na¬ 
tional  prosperity  becomes  within  a  limited  pe¬ 
riod  a  matter  of  no  uncertainty.  To  disregard 
and  refuse  them  is  to  protract  but  not  to  prevent 
the  attainment  of  a  like  result,  for  the  nation, 
even  under  bad  management,  will  in  the  course 
of  time  drift  out  of  its  difficulties ;  but  this  will 
be  through  the  honesty  and  economy  of  its  indi¬ 
vidualism,  and  through  the  development  of  its 
great  national  resources,  and  not  because  the 
government  either  wills  or  directs  it. 

RESTORATION  OF  NATIONAL  CREDIT,  AND  RESUMP¬ 
TION  OF  SPECIE  PAYMENT. 

The  Commissioner  does  not  feel  that  it  is  his 
province  to  present  any  plan  in  detail,  whereby 
a  surplus  like  that  anticipated  can  be  best  used 
for  facilitating  a  return  to  specie  payments ;  but 
he  does  feel  convinced  that  if  one-half  of  such 
surplus,  or  from  two  to  two  and  a  half  per  cent, 
on  the  whole  debt,  were  applied  regularly,  month 
after  month,  and  year  after  year,  to  purchase  in 


*  The  present  cost  of  the  ratification  of  the  proposed  treaty  with  the  Sandwich  Islands,  through  a  diminution  of  the  current 
receipts  xrom  imports,  will  not  be  less  than  five  hundred  thousand  dollars,  gold,  per  annum  ;  which  amount  in  a  comparatively 
short  time,  through  the  profit  assured  by  the  treaty  to  the  sugar-growers  of  the  Islands  on  the  one  hand,  and  to  the  sugar  refiners 
of  San  Francisco  on  the  other,  will  undoubtedly  be  increased  three  or  four  fold,  or  from  a  million  to  a  million  and  a  half,  gold,  per 
annum.  I  he  Commissioner  submits  that  there  can  be  no  advantage  shown  to  accrue  to  the  United  States  at  the  present  time 
from  the  ratification  of  this  treaty,  which  will  at  all  compensate  for  the  detriment  which  it  will  surely  bring  to  the  treasury. 


42 


the  open  market,  and  to  the  cancellation  of  the 
gold  interest-bearing  obligations  of  the  govern¬ 
ment,  so  long  as  those  obligations  can  be  obtained 
at  a  discount  from  their  par  value  in  gold ;  and 
if,  at  the  same  time,  the  legal-tender  notes  were, 
under  certain  restrictions  as  to  time  and  quantity, 
made  convertible  at  the  pleasure  of  the  holder 
into  interest-bearing  bonds,  that  the  value  of  both 
bonds  and  currency  might  be  so  greatly  and  so 
rapidly  enhanced  as  to  make  a  resumption  of 
specie  payments  a  matter  of  much  less  difficulty 
than  it  now  appears.* 

If  it  be  objected  that  this  measure  involves 
contraction  of  the  legal-tender  currency,  the  Com¬ 
missioner  would  reply  that  he  is  in  favor  of  such 
contraction.  Resumption  of  specie  payments  can 
be  commenced  at  any  time;  but  the  question  is 
not  of  commencement,  but  of  continuance ;  and  in 
order  that  there  may  be  continuance ,  there  must  be 
a  certain  proportion  or  ratio  first  established  between 
the  amount  to  be  redeemed  and  the  agency  (coin)  which 
is  to  redeem.  This  ratio,  considering  the  amount 
of  legal-tender  and  national  bank  currency  in  ex 
istence,  could  not  probably  with  safetjq  at  the 
existing  premium  on  gold,  be  assumed  at  less 
than  the  total  amount  of  United  States  notes 
now  outstanding.  At  present  the  treasury  has 
no  such  amount  of  gold  at  command,  and  for  the 
future  but  two  methods  present  themselves  for 
its  obtainment,  viz:  either  to  hoard  and  accu¬ 
mulate  gold  out  of  the  national  surplus  revenue, 
or  to  reduce  the  volume  of  the  currency,  either 
by  direct  payment,  or  by  funding,  (which  is  in 
once  sense  also  payment,)  to  a  point  where  the 
ability  of  the  treasury  will  be  sufficient  to  com¬ 
pass  the  end  desired.  The  first  is  a  work  of 
time,  and  dependent  upon  many  contingencies. 
The  second  can  be  effected  more  rapidly — per¬ 
haps  as  rapidly  as  may  be  desirable.  But  this 
is  the  problem  to  be  worked  out  sooner  or  later, 
and  if  the  Commissioner  has  rightly  stated  its 
conditions;  much  of  the  discussion  which  is  con¬ 
tinually  taking  place  respecting  the  necessity  of 
currency,  and  the  desire  of  the  people  for  its  con¬ 
tinuance,  is  of  comparatively  little  moment. 

As  bearing  upon  the  proposition  to  accumu¬ 
late  gold  in  the  treasury  with  a  view  of  resump¬ 
tion,  it  is  important  to  consider  the  exact  posi- 
tfon  of  the  United  States  in  respect  to  its  foreign 
commercial  relations  and  exchanges. 

Thus  it  appears  from  the  statistics  of  com¬ 
merce  and  navigation,  that  the  imports  and  ex¬ 
ports  of  merchandise — exports  reduced  to  gold 
values,  and  exclusive  of  the  movement  of  bullion 
and  specie — for  the  fiscal  year  1858,  were  as 
follows : 


Net  imports  of  merchandise . $347,549,209 

Net  exports  of  merchandise .  269,042,041 


Apparent  bal.  against  the  U.  S.. .  $78,507,168 


To  settle  this  treasury  balance  and  for  other 
purposes,  there  was  sent  out  of  the  country  du¬ 
ring  the  fiscal  year  1867-68,  specie  and  bullion 
to  the  value  of  $83,746,161,  and  national  bonds 
and  other  evidences  of  indebtedness  to  an  esti¬ 
mated  amount  of  $100,000,000  ;  and  that  this  ad¬ 
ditional  amount  was  needed  to  pay  an  indebted¬ 
ness  of  the  United  States  to  foreign  countries 
over  and  above  what  the  returns  of  imports 
would  indicate,  is  evidenced  by  the  fact  that 
exchange  during  the  whole  period  in  question 
was  in  favor  of  Europe  and  against  the  United 
States.  This  indebtedness  was  undoubtedly 
created  through  the  following  agencies :  first, 
freights,  which  are  in  a  great  degree  carried  by 
foreign  vessels;  second,  expenses  of  Americans 
travelling  in  foreign  countries;  third,  interest 
on  public  and  private  securities  held  abroad ; 
fourth,  undervaluation,  and  smuggling. 

With  a  drain  of  gold  out  of  the  country  from 
legitimate  causes,  therefore,  in  excess  of  the  an¬ 
nual  product  of  our  mines ;  and  with  influences 
at  work  which  tend  to  increase  rather  than  di¬ 
minish  such  a  movement  for  the  future,  the  prac¬ 
ticability  of  accumulating  within  any  reasonable 
time  a  quantity  of  coin  in  the  treasury  sufficient 
to  insure  the  continuance  of  resumption,  without 
at  the  same  time  producing  great  disturbances 
in  business,  appears  to  the  Commissioner  to  be 
altogether  problematical, 

Again,  as  bearing  upon  the  proposition  of 
contraction  as  a  method  of  arriving  at  resump¬ 
tion,  the  Commissioner  believes  that  no  man  can 
look  back  to  the  period  when  a  moderate  con¬ 
traction  was  authorized  by  Congress,  and  put 
his  finger  on  one  single  bad  result  assumed  to 
have  flowed  from  such  contraction,  which  was 
not  due,  in  the  first  instance,  to  a  wholly  imagi¬ 
native  influence ;  and  furthermore,  the  Commis¬ 
sioner  asserts  that  no  man  caa  review  the  his¬ 
tory  of  prices  when  contraction  was  authorized 
and  in  operation,  without  feeling  convinced  that 
there  was,  during  such  time,  i.  e.,  from  March, 
1866,  to  January,  1868,  a  tendency  to  a  gradual 
and  healthy  shrinkage  of  values  and  prices  ; 
and  that  the  shrinkage  in  prices  which  actually 
did  occur  was  equivalent,  through  an  increase 
in  the  purchasing  power  of  the  money  in  use, 
to  a  practical  increase  and  not  to  a  diminution 
of  the  power  of  the  currency  to  effect  exchanges. 
This  increase  was  estimated  by  the  Commis¬ 
sioner  in  his  last  report  to  have  been  equal,  du¬ 
ring  the  year  1867  alone,  to  at  least  $100,000,- 

ooo. 

The  Commissioner  sees  no  economical  objec¬ 
tion  to  an  increase  of  the  national  bank  circula-  ' 
tion  equal  to  the  proposed  decrease  of  the  United 
States  notes,  inasmuch  as  the  banks  are  required 
to  resume  specie  payments  whenever  the  gov¬ 
ernment  shall  do  so.  The  authority  for  such, 
increase  of  national  bank  notes  would  be  imme- 
I  diately  availed  of  in  the  event  of  monetary  strin- 


*  The  Commissioner  would  again  invite  the  attention  of  Congress  to  the  fact  that  the  legal-tender  notes  Issued  under  the  acts 
of  February  25  and  July  11,  1862,  are,  by  the  terms  of  their  issue,  convertible  into  United  States  5-20  bonds,  the  pledge  of  the 
government  having  been  engraved  upon  each  one  of  said  notes.  It  is  true  that  Congress  attempted,  subsequently  to  the  issue  of 
the  notes,  to  revoke  this  privilege  by  declaring  that  the  right  of  conversion  should  cease  on  a  certain  day.  The  right  of  the  gov¬ 
ernment  to  alter  the  terms  of  the  issue  without  the  consent  of  the  holders  of  the  notes  has  recently  been  called  in  question,  and 
the  Commissioner  is  advised  that  these  notes  have,  within  a  few  months,  been  sorted  and  hoarded  in  the  reserve  fund  of  the 
banks  to  a  very  large  extent,  under  the  impression  that  the  government  will  be  compelled  ultimately  to  convert  them  into 
bonds, 


gency,  but  not  otherwise.  If  we  assume  that  the 
aggregate  paper  circulation  is  not  to  be  increased 
until  specie  payments  are  fully  restored,  the  Com¬ 
missioner  cannot  conceive  of  any  better  mode  of 
giving  flexibility  to  the  currency  than  this.  It 
is  alleged  that  an  undue  proportion  of  the  exist¬ 
ing  circulation  issued  under  the  national  banking 
law  is  held  in  the  eastern  States,  and  that  the 
west  and  south  are  entitled,  by  virtue  of  their 
population,  to  a  greater  ratio  than  they  now 
have.  If  this  be  true,  as  the  Commissioner  be¬ 
lieves,  the  additional  amount  here  contemplated 
might  properly  be  assigned  to  those  States  where 
the  alleged  inequality  is  complained  of,  thus  re¬ 
storing  the  equilibrium  contemplated  by  law 
without  taking  from  the  eastern  States  any  privi¬ 
leges  which  they  now  enjoy. 

REFUNDING  OF  THE  NATIONAL  DEBT  AT  A  LOWER 
RATE  OF  INTEREST. 

The  national  bonds  and  the  legal  tender  notes 
being  once  brought  to  par  with  gold,  and  the 
national  credit  thus  fully  restored,  the  gradual 
refunding  of  the  debt  at  a  lower  rate  of  interest 
becomes  then,  for  the  first  time,  really  practica¬ 
ble.  We  use  the  expression  “the  first  time,” 
because  a  principle  should  be  kept  clearly  in 
view  which  heretofore  has  not  always  been  done 
in  the  discussion  of  this  subject,  viz.,  that  the  rate 
at  v)hich  governments  can  borrow  is  indicated  not 
by  the  nominal  rates  of  interest  which  they  may 
offer,  but  by  the  price  of  their  stocks.  They  may 
indeed,  as  has  been  expressed  by  a  recent  foreign 
writer,  “  fix  once  for  all  in  issuing  a  loan  the  in¬ 
terest  of  which  they  will  have  to  pay,  but  the 
interest  which  the  individual  fund  holder  will 
derive  is,  of  course,  entirely  determined  by  the 
price  at  which  he  buys  his  stock.”  Whoever,  at 
this  moment,  buys  in  Europe  our  bonds,  nomi¬ 
nally  yielding  six  per  cent,  interest,  for  75  gold, 
practically  expresses  the  fact  that  the  rate  at 
which  it  suits  him  to  lend  money  to  the  United 
States  is  eight  per  cent,  gold  per  annum ;  and 
there  is  no  possible  way  in  which  the  United 
States,  or  any  other  government,  can  help  itself, 
with  advantage  in  this  matter,  except  to  so  far 
elevate  its  credit  as  to  render  the  purchase  of  its 
securities  at  a  higher  figure  desirable,  or,  what 
is  the  same  thing,  induce  a  loan  to  itself  from  the 
capitalist  at  a  lower  rate  of  interest.  So  long, 
therefore,  as  the  government  credit  is  depreci¬ 
ated,  any  advantage  to  be  derived  from  the  issue 
of  bonds  bearing  a  lower  rate  of  interest,  will  be 
fully  compensated  by  the  reduction  in  price 
which  such  bonds  must  sustain  in  the  open  mar- 
*  ket ;  or,  in  other  words,  the  only  method  avail¬ 
able  alike  to  nations  and  individuals  for  the 
attainment  of  a  low  rate  of  interest  is  to  offer 
perfect  security.  Furthermore,  with  the  eleva- 
\  tion  of  the  national  securities  to  par,  the  issue  of 
national  bank  currency,  based  upon  bonds,  will 
be  equivalent,  or  nearly  so,  to  the  issue  of  cur¬ 
rency  based  upon  specie,  and  with  a  system  of 
redemption,  either  in  specie  or  treasury  notes, 
(legal  tenders  redeemable  in  specie,)  which  could 
be  easily  provided  for,  the  government  might 
then  safely  remove  all  restrictions  from  free 
banking,  and  allow  the  demand  for  currency  to 
regulate  the  issue. 


CONTRACTS  ON  A  GOLD  BASIS. 

One  of  the  most  wholesome  measures,  in  the 
judgment  of  the  Commissioner,  for  smoothing  the 
way  to  specie  resumption  would  be  an  act  legal¬ 
izing  gold  contracts.  A  much  larger  share  of 
the  business  of  the  country  than  is  generally  sup¬ 
posed  is  now  transacted  in  gold,  the  parties  rely¬ 
ing  upon  the  rules  of  commercial  integrity  for 
the  fulfilment  of  contracts  which  the  law  fails  to 
provide  for  their  enforcement.  These  transac¬ 
tions  relate  principally  to  foreign  goods,  the  cost 
of  which  is  always  computed  in  coin.  Under 
existing  laws  the  citizen  may  make  any  contract 
for  the  disposition  of  his  property  or  services, 
payable  in  anything  except  the  recognized  money 
of  the  world,  and  the  government  stands  ready 
to  enforce  it.  When  he  bargains  for  gold  or  its 
equivalent  he  becomes  practically  an  outlaw. 
Under  the  operation  of  this  policy  we  are,  to  a 
large  extent,  cut  off  from  the  money  reservoir  of 
the  world,  i.  e.,  the  aggregate  amount  of  gold  and 
silver  coin  and  bullion  in  use  among  all  nations. 
Gold  will  go  where  it  is  appreciated,  and  will 
refuse  to  stay  when  there  is  no  use  for  it.  It  is 
idle  for  us  to  expect  to  retain  the  product  of  our 
own  mines  if  we  refuse  to  give  it  as  good  em¬ 
ployment  and  character  as  other  nations  do. 

The  question  whether  the  introduction  of  two 
standards,  possessing  unequal  value,  into  com¬ 
mercial  transactions  would  be  deleterious  to  the 
business  of  the  country,  seems  to  be  sufficiently 
answered  by  the  fact  that  no  harm  has  come 
from  the  employment  of  gold  as  the  standard  in 
reference  to  articles  imported  from  abroad.  Rea¬ 
soning  a  priori,  it  can  hardly  be  supposed  that 
the  introduction  of  a  better  currency  will  have 
the  effect  to  deteriorate  the  whole  mass.  The 
immediate  effect  of  an  act  of  Congress  legalizing 
gold  contracts  might  be  to  advance  the  price  of 
gold  by  creating  a  sudden  demand  without  add¬ 
ing  to  the  supply.  But  this  effect  (if  it  should 
take  place)  would  be  only  temporary,  for  the 
demand  would  be  answered  by  unlocking  hoarded 
gold,  by  checking  the  exportation  of  bullion,  and 
by  calling  in  as  large  a  supply  from  abroad  as 
might  be  needed  for  legitimate  business. 

It  has  been  objected  that  an  act  legalizing  gold 
contracts  would  cause  the  holders  of  promissory 
notes,  mortgages,  &c.,  to  call  in  their  loans  and 
require  borrowers  to  make  new  contracts  with 
them  on  a  gold  basis,  thus  practically  increasing 
the  rate  of  interest.  The  Commissioner  believes 
that  this  objection  is  fallacious.  The  lender  of 
money  will  always  charge  the  borrower  for  the 
risk  of  depreciation  of  the  currency  in  which  the 
loan  is  payable.  Such  risk  must  always  be 
greater  in  an  irredeemable  paper  currency  than 
in  the  precious  metals  ;  therefore  the  rate  of  in¬ 
terest  must  be  higher.  Usury  laws  may  aggra¬ 
vate,  but  cannot  overturn  this  principle,  which 
is  as  well  established  as  any  fact  in  economical 
science.  The  rate  of  interest  depends,  in  general, 
upon  the  demand  and  supply  of  loanable  capital, 
and  in  particular  upon  the  nature  of  the  security 
offered.  An  Act  of  Congress  legalizing  gold 
contracts  will  not  alter  the  demand  or  supply  of 
loanable  capital,  but  it  will  furnish  a  higher  se¬ 
curity  for  loans.  Payment  cannot  be  demanded 


44 


upon  outstanding  notes,  mortgages,  (fee.,  until 
they  bedome  due.  When  they  fall  due  the  pay¬ 
ers  will  settle  with  the  payees  according  to  these 
principles,  and  if  new  loans  are  necessary  the 
rate  of  interest  will  not  be  higher  by  reason  of 
the  security  being  better. 

To  conclude  this  branch  of  the  discussion,  the 
Commissioner  would  remark  that  a  government 
ought  not  to  deny  its  citizens,  in  time  of  peace, 
the  right  to  put  their  business  upon  a  substanial 
basis.  If  it  is  impolitic  for  government  to  en¬ 
courage  a  gambling  spirit  among  men,  it  is  still 
more  impolitic  to  compel  them  to  resort  to  games 
of  hazard  and  chance  in  their  daily  transactions. 
Under  existing  laws,  each  man  is  required  to  take 
into  his  calculations  the  probable  fluctuations  of 
the  currency,  and  these  are  dependent  upon  cir¬ 
cumstances  so  numerous  and  complicated  that 
nothing  short  of  omniscience  can  foretell  them. 
W e  have  recently  witnessed  the  unhappy  results 
of  what  is  called  a  “  currency  corner,”  or  the 
sudden  locking  up  of  a  large  amount  of  legal- 
tender  notes  at  the  financial  centre  of  the  coun¬ 
try,  the  apparent  purpose  and  actual  consequence 
of  which  were  to  create  a  panic  and  cause  an  ar¬ 
tificial  decline  in  the  prices  of  property.  We  are 
justified  in  denominating  this  procedure  not  only 
as  gambling,  but  gambling  with  loaded  dice.  So 
long  as  we  are  cut  off  by  law  from  participation 
in  the  gold  supply  of  the  world,  which  consti¬ 
tutes  the  balance  wheel  of  human  industry,  we 
are  subject  to  these  and  similar  cheating  de¬ 
vices.  The  aggregate  amount  of  gold  and  sil¬ 
ver  coin,  and  bullion,  in  the  world  is  too  large 
and  too  widely  distributed  ever  to  be  made  the 
subject  of  an  artificial  “  corner.” 

It  is  now  nearly  seven  years  since  gold 
and  silver  disappeared  from  circulation  among 
us.  During  this  time  a  large  proportion 
of  the  young  men  and  women  of  the  coun¬ 
try  have  come  upon  the  stage  of  active  life. 
They  have  grown  up  without  any  practical 
knowledge  of  the  virtues  of  a  metallic  currency. 
Their  ideas  and  habits  have  been  formed  in  the 
most  vicious  school  of  economy;  and  it  is  ex¬ 
ceedingly  desirable  that  specie  should  reappear 
among  us  before  this  baneful  education  shall 
have  ripened  into  its  natural  fruit  of  universal 
extravagance  and  insolvency. 

REDUCTION  OF  TAXATION,  WITH  A  VIEW  OF  RE¬ 
DUCING  THE  COST  OF  PRODUCTION. 

In  the  application  of  a  moiety  of  the  antici¬ 
pated  surplus  to  the  reduction  of  taxation,  the 
especial  object  sought  to  be  accomplished  should 
be  the  reduction  of  the  cost  of  national  produc¬ 
tion;  with  a  view  of  removing  those  impedi¬ 
ments  which  now  so  greatly  restrict  and,  in 
many  instances,  prevent  the  free  exchange  of 
the  products  of  American  industry  with  the 
needed  products  of  other  nations ;  and  thus 
bring  to  the  country  a  more  favorable  balance 
of  trade  than  now  exists.  In  using  the  expres¬ 
sion,  balance  of  trade,  the  Commissioner  does 
not  wish  to  be  understood  as  recognizing  in  any 
way  the  old  exploded  ideas  in  respect  to  this 
subject,  viz. :  that  a  nation  gains  in  proportion 
to  what  it  sends  abroad,  and  loses  in  proportion 
to  what  it  receives  back ;  but  he  does  mean  to 


clearly  express  the  opinion,  that  a  condition  of 
affairs  like  that  now  existing  in  the  United 
States,  whereby  gold  and  silver,  and  certificates 
of  national  indebtedness  continually  tend  to 
flow  out  of  the  country  in  payment  for  foreign 
commodities,  in  preference  to  the  products  of 
domestic  industry,  is  both  unnatural  and  in¬ 
jurious,  and  is  a  condition  of  affairs  exactly  the 
reverse  of  what  prevails  in  Great  Britain, 
France,  and  other  prosperous  commercial  na¬ 
tions. 

The  Commissioner  believes  that  he  has  already 
sufficiently  indicated  the  course  he  would  recom¬ 
mend  in  reference  to  the  application  of  the  an¬ 
ticipated  surplus  to  the  reduction  of  taxes.  In 
the  department  of  internal  revenue,  the  removal 
of  the  taxes  on  the  transportation  of  passengers, 
the  receipts  of  telegraph  and  express  companies, 
the  manufacture  of  gas,  and  possibly  upon  sales, 
would  reduce  that  branch  of  our  revenue  sys¬ 
tem  to  almost  the  simplest  form  that  can  be 
devised  for  the  collection  of  the  requisite 
amount  of  money  which  the  requirements  of 
the  treasury  may  necessitate. 

In  the  matter  of  the  tariff,  the  Commissioner 
trusts  that  the  government  will  not  allow  itself 
to  be  diverted  from  the  consideration  of  the 
real  question  at  issue,  through  any  prejudice 
which  may  be  evoked, either  on  behalf  of  free  trade 
or  protection.  There  is  no  considerable  propor¬ 
tion  of  the  people  of  the  United  States  in  favor  of 
the  adoption  of  free  trade  in  the  European  sense, 
even  were  the  necessities  of  the  treasury  for  reve¬ 
nue  far  less  urgent  than  at  present.  There  are 
none  worthy  to  bear  the  name  of  an  American  cit¬ 
izen  who  desire  that  the  industry  of  foreign  coun¬ 
tries  should  prosper  and  be  extended  at  the  ex¬ 
pense  of  our  own. 

Since  the  Commissioner  entered  upon  his 
official  duties  in  the  spring  of  1865,  he  has 
made  it  his  special  business  to  enquire  into  the 
condition  of  American  industry,  in  all  its  de¬ 
partments,  and  acquaint  himself  with  its  neces¬ 
sities  and  deficiencies.  He  has  for  this  purpose 
visited  the  principal  seats  of  the  most  important 
branches  of  industry  in  the  country,  conferred 
with  their  most  intelligent  representatives,  and 
personally  inspected  the  detail  of  many  manu¬ 
facturing  operations.  He  has,  also,  during  this 
period,  been  afforded  an  unusual  opportunity 
of  observing  the  manufacturing  systems  of 
Europe,  and  acquainting  himself,  through  per¬ 
sonal  and  local  inquiry,  in  respect  to  the  cost  of 
European  production,  and  the  condition  and 
wages  of  European  laborers.  He  has  sought  in 
all  this  to  promote  the  interests  of  his  country, 
to  know  only  the  truth,  and  when  found  he  has 
not,  thus  far,  in  his  official  communications, 
hesitated  to  speak  it  boldly  ;  and  the  general 
conclusion  of  his  investigations  in  this  depart¬ 
ment  is,  that  the  policy  of  moderate  and  judicious 
protection  under  the  tariff  is  certainly,  for  the 
present,  the  policy  best  suited  to  subserve  the  indus¬ 
trial  interests  of  the  whole  country. 

Thus,  it  cannot  be  doubted,  that,  so  long  as 
the  existing  systems  of  national,  State,  and 
local  taxation  continue  to  impose  heavy  burdens 
upon  the  American  producer,  such  burdens 


45 


should  not  be  allowed  to  work  to  the  advantage  of 
the  foreign  competitors  in  the  domestic  market. 

So  long,  moreover,  as  a  system  of  diversified 
manufacturing  industry,  is  recognized  as  desir¬ 
able  in  the  United  States,  so  long  it  is  the  duty 
of  the  national  government  to  guarantee  to  that 
interest  the  conditions  of  stability.  Such  sta¬ 
bility  is  not,  however,  possible,  if  undue  facili¬ 
ties  are  offered  to  the  European  manufacturer  of 
using  the  American  markets  for  temporary 
realization  to  meet  emergencies  through  the 
forced  sale  of  commodities  ;  or  for  the  disposal, 
at  any  sacrifice,  of  stock  which  may  have  hap- 
*  pened  to  constitute  an  unsaleable  surplus  in 
Europe.  The  argument  that  if  foreigners  are 
willing  to  sell  goods  under  cost  it  is  our  interest 
to  receive  them,  loses  in  a  great  measure  its 
force,  from  the  fact  that  such  a  trade  is  not 
1  regular  and  legitimate,  but  spasmodic  and  ex¬ 
ceptional,  and  renders  success  in  many  branches 
of  industry  dependent  upon  accident  rather  than 
upon  the  exercise  of  skill,  foresight,  and  pru¬ 
dence.  In  short,  such  trade  is  a  perpetual 
menace  to  the  domestic  market  without  produc¬ 
ing  any  commensurate  good. 

During  the  period  of  commercial  depression 
throughout  Europe,  in  1867,  it  is  known  to  the 
Commissioner  that  it  became  a  question  with 
many  of  the  continental  manufacturers  whether 
to  close  their  mills  and  allow  their  operatives  to 
disperse,  or  to  continue  their  manufacturing 
operations  at  a  loss,  retaining  thereby  their 
supply  of  skilled  labor  ;  and  in  many  instances 
the  latter  alternative  was  decided  to  be  the 
most  advantageous.  In  such  cases  the  Ameri¬ 
can  market  was  regarded  as  the  most  available 
for  the  disposal  of  the  commodities  thus  manu¬ 
factured,  not  only  without  profit,  but  with  an 
absolute  loss,  even  under  the  most  favorable 
condition  as  regards  European  prices  for  labor 
and  material.  JSTow,  how  far  it  is  for  the  inter¬ 
ests  of  this  country  to  allow  itself  to  be  made 
the  means  of  assisting  foreign  manufacturers  to 
tide  over  a  period  of  financial  embarrassment, 
may  be  an  open  question,  but  the  Commissioner 
has  no  doubt  that  even  the  temporary  gain 
which  might  result  to  the  United  States,  from 
the  opportunity  to  purchase  cheap  commodities 
under  such  circumstances,  would  be  more  than 
compensated  by  the  disturbance  which  would 
be  occasioned  thereby  to  legitimate  domestic 
industry.  It  should,  however,  be  remarked, 
that  the  condition  of  things,  as  here  described 
must  be  necessarily  of  short  duration  in  any 
particular  instance. 

v  There  is  furthermore  another  view  of  this 
question  which  cannot  be  overlooked  in  this 


country — its  social  aspect.  Free  trade  looks  only 
to  the  increase  of  wealth.  It  takes  no  account  of 
social  results ;  it  does  not  even  regard  the  distri¬ 
bution  of  property.  Even  English  economists 
admit  that  its  axioms  lead  to  sameness  of  occupa¬ 
tion,  and  sameness  of  occupation  means  a  tardy 
development  of  society.  But  in  this  country 
every  man  is  a  citizen  and  nearly  every  citizen 
a  voter.  As  the  possessors  of  power  we  cannot 
afford  to  have  any  class  of  the  people  ignorant 
or  socially  degraded.  To  insure  a  safe  standard 
of  education  and  of  domestic  comfort,  there  must 
be  a  certain  scale  of  wages,  and  these  must  be 
relatively  higher  than  are  paid  to  the  competing 
laborer  of  Europe,  to  whom  power  is  not  intrust¬ 
ed  and  education  is  denied.  These  degraded 
laborers  constitute  the  “  dangerous  classes,”  but 
no  dangerous  classes  ought  to  be  suffered  to  exist 
in  America.  Whatever  discrimination,  therefore, 
may  be  necessary  to  keep  up  the  social  status 
and  the  self-respect  of  the  American  voter,  is  a  tax 
imposed  by  our  political  system,  and  it  is  a  tax 
which  the  enjoyment  of  that  system  amply  repays. 

COMPARATIVE  WAGES  IN  CERTAIN  LEADING  BRANCHES 
OF  INDUSTRY  IN  TIIE  UNITED  STATES  AND  EUROPE. 

As  the  data  in  respect  to  this  matter  heretofore 
accessible  to  the  public  have  been  very  vague 
and  indefinite,  the  Commissioner,  through  his 
assistant,  Mr.  Edward  Young,  has  made  the  col¬ 
lection  of  such  information  a  specialty;  and 
although  the  work  of  comparison  is  extremely 
difficult,  and  often  most  unsatisfactory,  by  reason 
of  differences  in  the  nomenclature,  division,  and 
hours  of  labor  in  the  different  countries,  yet  some 
exceedingly  interesting  results  have  been  arrived 
at.  These  in  detail  will  be  found  in  the  appen¬ 
dix  to  this  report,  marked  E,  but  in  brief  are 
substantially  as  follows : 

Manufacture  of  cotton. — Average  excess  of 
wages  paid  in  the  United  States  in  1867,  over 
those  paid  for  corresponding  labor  in  Great 
Britain,  (gold  being  taken  as  the  standard  in  both 
cases,)  35^  per  centum. 

A  reduction  having  been  made  in  the  wages 
of  some  operatives  in  cotton  mills  during  the 
present  year  1868,  amounting  to  a  general  aver¬ 
age  of  five  per  cent,  on  the  aggregate  wages  paid, 
the  excess  over  the  average  rates  paid  in  Great 
Britain,  is  thereby  reduced  to  28.7  per  cent. 

In  Belgium,  from  an  examination  of  less  com¬ 
plete  data,  the  average  depression  in  wages,  as 
compared  with  the  United  States,  appears  to  be 
about  48  per  cent.  The  following  are  specific 
illustrations  of  the  wages  in  leading  specialties  of 
labor  in  the  cotton  manufacture  in  the  United 
States,  Great  Britain,  and  Belgium : 


Average  weekly  wages  or  earnings  (in  gold.) 


Occupations. 

In  the  United  States, 
(g^d,) 

In  England. 

In  Belgium. 

Excess  of  wages 
in  United  States 
over  England 

Excess  of  wages 
in  England  over 
Belgium. 

Drawing  frame  tenders . 

$3  44 

$2  75 

$2  10 

25  per  cent. 

31  per  cent. 

Roving  frame  tenders . 

3  54 

3  38 

3  00 

5  per  cent. 

13  per  cent. 

Mule  spinners . 

7  14 

5  36 

5  00 

35  per  cent. 

7  per  cent. 

Weavers . 

6  06 

4  54 

3  60 

33  per  cent. 

36  per  cent. 

46 


In  France  the  average  weekly  earnings  of  per¬ 
sons  employed  in  manufactories  of  cotton  are  as 
follows:  men,  $4  27;  women,  $2  51;  boys,  81 
cents,  and  girls,  $1  04.  Taking  the  467  men  and 
1,446  women  employed  in  that  branch  in  Paris, 
the  average  weekly  wages  of  adults  is  14,93  francs, 
or  $2  98 ;  and  including  the  children  the  average 
is  13.82  francs,  or  $2  16. 

Manufactures  of  wool. — The  average  excess  of 


wages  paid  in  woollen  mills  of  the  United  States 
in  1667-68,  over  those  paid  for  similar  labor  in 
Great  Britain,  would  appear  to  be  about  25  per 
cent.  (24.53  per  cent. ;)  and  in  carpet  and  other 
worsted  mills  58  per  cent.  The  following  are 
specific  illustrations  of  the  average  weekly  wages 
paid  in  the  woollen  mills  of  the  three  countries 
above  referred  to : 


Occnpation. 

In  the  United 
States,  (gold.( 

In  England. 

In  Belgium. 

Carflfirs . 

$4  37 

8  23 

$3  85 

6  05 

$3  00 

Spinners,  (males) . 

Spinners,  females) . . . 

3  91 

2  75 

2  00 
2  40 

Drawers . 

5  89 

4  13 

“yVfiavp.rs  . . . . . 

5  73 

4  67 

3  20 

Fire-arms. — The  average  weekly  wages  of  all 
employes  in  the  manufactories  of  fire-arms  in  the 
United  States,  Geeat  Britain,  and  France,  in  the 
year  1867,  were  as  follows: 

In  the  United  States,  (Colt’s,  Sharp’s, 


and  Remington’s) .  $12  22 

In  England,  (Birmingham) .  11 9 

In  France,  (Paris) .  5  94 


In  this  branch,  therefore,  the  rates  of  wages  in 
the  United  States  are  56  per  cent,  more  than  in 


England,  and  105  per  cent,  more  than  in  France ; 
while  the  rates  in  England  are  24  per  cent,  in 
excess  of  those  in  France. 

Iron  founding  and  machine  building. — Average 
excess  in  wages  paid  in  iron  foundries  and  ma¬ 
chine  shops  in  the  United  States  in  1867-68,  over 
those  paid  for  similar  labor  in  England,  58  per 
cent.  The  following  are  specific  illustrations  of 
the  average  weekly  wages  paid  to  the  following 
enumerated  employes  in  this  branch  of  industry 
in  the  countries  above  referred  to : 


Occupations. 

In  the  United 
States,  (gold.) 

In  England. 

In  Belgium. 

In  Saxony. 

Moulders  . . . . 

$11  52 

11  54 

12  64 
12  32 
11  40 

7  03 

$8  00 

7  00 

7  50 

7  12 

7  50 

4  50 

$5  40 

3  60 

4  20 

4  12 

]VlB  ch  uni  sfs . , . . . . 

Boiler-niakerp . . 

$4  50 
3  75 

Blacksmiths . 

Engineers . 

Laborers . . 

2  40 

1  80 

Iron  Manufacture. — In  this  department  we  se¬ 
lect  the  price  paid  for  puddling,  as  an  indication 
of  the  entire  average  of  wages  in  this  branch  of 
industry  in  the  different  countries,  although  the 
work  performed  under  this  head  is  not  always 
the  same  in  every  establishment.  The  following 
data  are  submitted : 

Price  of  puddling  iron  per  ton  in  New  Eng¬ 
land,  $5  00;  in  New  York,  $5  50;  New  Jersey, 
$6  00;  Eastern  Pennsylvania,  $6  00;  Western 
Pennsylvania,  $6  75;  in  Western  States,  $7  50; 
average  price  in  currency,  $6  1234-  Average 
price  in  gold,  United  States,  $4  37% ;  England, 
$2  37%;  Belgium,  $1  20. 

The  average  weekly  earnings  of  puddlers  in 
the  leading  iron  producing  countries  are  as 


follows : 

United  States,  (gold) . $16  54 

England .  8  75 

France . 8  00 

Belgium .  6  00 

Russia,  (at  the  Vicksa  iron  works) .  1  93 


Unskilled  Labor. — The  following  are  the  ave¬ 
rage  rates  of  weekly  wages  paid  for  unskilled 
labor  in  the  manufacturing  establishments  of  the 
countries  below  enumerated : 


In  the  United  States,  general  average, 

(in  gold) .  $6  81 

In  Great  Britain,  general  average .  4  50 

(Sheffield  $5  25,  Hull  $4  50,  Wigan 
$4  25,  Bradford  $4  00,  Glasgow 
$3  75.) 

France .  3  60 

Belgium — Liege  $2  40,  Ghent,  in  cotton 
mills,  $2  52,  Mayence  $2  40. 

Saxony,  (Dresden) .  2  25 

Prussia,  (Berlin) .  3  10 

Russia,  (at  the  Yicksairon  works) .  1  33 


COMPARATIVE  COST  OF  PRODUCTION  IN  THE  UNITED 
STATES  AND  EUROPE. 

Now  while  the  American  producer,  in  these 
and  doubtless  some  other  respects,  labors  under 
great  and  serious  disadvantages  as  compared 
with  his  European  competitor,  it  seems  equally 
clear  to  the  Commissioner  that  these  disadvan¬ 
tages  are  not  and  cannot  be  compensated  for  by 
the  adoption  of  an  indiscriminate,  arbitrary  rule 
of  protection,  and  that  it  is  not  for  the  interest 
of  the  country  that  such  indiscriminate  protec¬ 
tion  as  has  heretofore  been  granted,  and  seems 
likely  to  be  further  asked  for,  should  be  con¬ 
tinued. 


47 


Thus  in  most  of  the  tariff  discussions  that  have 
taken  place  of  late  in  the  United  States,  the 
question  of  the  necessity  and  extent  of  protec¬ 
tion  is  made  to  turn  almost  wholly  upon  the  dif¬ 
ference  in  the  cost  of  labor  employed  in  do¬ 
mestic  as  compared  with  foreign  industry — 
which  differences,  as  already  shown,  are  cer¬ 
tainly  very  considerable.  And  it  is  also  very 
generally  taken  for  granted  in  such  discussions, 
that  the  nominal  rate  paid  for  wages,  of  itself 
alone,  or  at  least  in  a  very  great  degree,  deter¬ 
mines  both  the  cost  of  production  and  the  social 
condition  and  prosperity  of  the  laborer.  It  is 
difficult,  however,  to  conceive  of  a  more  egre¬ 
gious  fallacy  that  is  involved  in  such  assump¬ 
tion  ;  inasmuch  as  it  is  not  the  nominal  rate  paid 
for  wages,  but  rather  what  the  labor  employed 
actually  produces,  and  what  the  wages  paid  are 
i  able  to  purchase,  that  determines  both  of  these 
questions. 

A  striking  illustration  of  the  truth  of  the  first 
proposition  is  to  be  found  in  the  circumstance 
that  while  the  wages  paid  in  Great  Britain  in 
almost  every  branch  of  industry  are  uniformly 
much  higher  than  those  paid  for  the  purchase  of 
similar  labor  upon  the  continent — the  rates,  for 
example,  paid  for  female  labor,  in  the  cotton 
manufacture,  ranging  from  12s.  to  los.  per  week 
in  Great  Britain, ;  7s.  3 d.  to  9s.  7 d.  in  France, 
Belgium  and  Germany:  and  2s.  4 d.  to  2s.  lid 
in  Russia — the  one  thing  which  is  the  most 
dreaded  by  continental  manufacturers  every¬ 
where  is  British  competition ;  and  this  feeling 
of  apprehension  manifests  itself  most  strongly, 
and  the  demand  for  protection  becomes  the  loud¬ 
est,  in  those  very  districts  of  continental  Eu¬ 
rope,  as,  for  example,  in  France,  Austria  and 
Russia,  where  the  average  of  wages  reach  their 
minimum,  and  moreover,  at  those  times  espe¬ 
cially  when  through  commercial  depression  and 
the  scarcity  of  employment,  a  supply  of  labor 
becomes  available  to  the  continental  manufac¬ 
turer  at  rates  even  below  the  general  average. 
The  recently  manifested  opposition  in  France  to 
the  continnance  of  the  Cobden  treaty,  and  the  | 
demand  on  the  part  of  the  French  manufacturers 
for  its  abrogation  and  for  a  renewal  of  high  du¬ 
ties,  is  in  itself  also  a  further  proof  and  confes¬ 
sion  of  the  truth  of  the  proposition  we  have  sub¬ 
mitted.* 

It  is  also  worthy  of  note,  that  notwithstanding 
the  many  statements  which  have  been  made  of 


late  respecting  the  interference  of  the  cheaper 
labor  of  the  continent  with  the  industry  of  Great 
Britain,  there  has  been  up  to  this  time,  taking 
the  average  of  the  last  five  years,  no  decrease 
whatever,  in  any  of  the  great  leading  products 
of  British  industry,  or  in  the  quantity  of  such 
products  exported  and  sold  to  foreign  countries ; 
but,  on  the  other  hand,  the  commercial  returns 
show,  for  the  period  specified,  a  rapid  and  con¬ 
tinual  increase  of  such  products  and  of  such  ex¬ 
ports.  The  markets  and  the  character  of  the 
product  may  change,  but  the  aggregate  of  pro¬ 
duction  increases  in  defiance  of  all  competition. 

The  explanation  of  this  curious  politico-eco¬ 
nomic  phenomena  is  undoubtedly  to  be  found  in 
the  fact  that  whatever  of  increased  price  Great 
Britain  pays  for  her  labor,  as  compared  with  the 
price  paid  for  similar  service  upon  the  conti¬ 
nent,  is  far  more  than  compensated  by  the 
greater  corresponding  product  of  British  indus¬ 
try,  and  also  to  some  extent  by  the  gain  which 
results  to  the  British  manufacturer  by  the  com¬ 
mand  of  cheaper  and  more  abundant  fuel. 

As  an  illustration  of  this  we  quote  from  a  re¬ 
cent  report  of  the  inspectors  of  British  factories,! 
the  following  statement  showing  the  average 
number  of  persons  employed  to  spindles  in  the 
cotton  manufactories  in  Europe: 

“In  France,  one  person  to  14  spindles;  in 
Russia,  one  person  to  28  spindles ;  in  Prussia, 
one  person  to  37  spindles ;  in  Bavaria,  one  per¬ 
son  to  46  spindles,  in  Austria,  one  person  to  49 
spindles  ;  in  Belgium  and  Saxony,  one  person  to 
50  spindles ;  in  Switzerland  and  the  smaller 
states  of  Germany,  one  person  to  55  spindles; 
in  Great  Britain,  one  person  to  74  spindles.  ” 

And  the  inspector  further  adds  that  this  com¬ 
parison  “  is  unfavorable  to  Great  Britain,  inas¬ 
much  as  there  is  so  large  a  number  of  factories 
in  the  latter  country  in  which  weaving  by  pow¬ 
er  is  carried  on  in  conjunction  with  spinning, 
while  the  factories  abroad  are  chiefly  spinning 
factories.” 

Now,  if  the  above  statement  is  correct,  it  fol¬ 
lows  that  although  the  British  cotton  manufactu¬ 
rer  pays  on  an  average  200  to  300  per  cent,  more 
for  his  labor  than  is  paid  by  the  cotton  manufac¬ 
turer  of  Russia,  the  labor  of  Great  Britain  is  re¬ 
ally,  of  the  two,  the  cheaper  labor,  and  the  Rus¬ 
sian  manufacturer  acknowledges  it  by  asking  and 
receiving  a  high  protective  tariff.  \ 

The  report  above  referred  to  also  furnishes  a 


*  “  Addresses  are  being  signed  in  the  manufacturing  districts  of  Moravia  and  Lower  Austria,  petitioning  the 
Reichsrath  not  to  sanction  the  treaty  of  commerce  concluded  between  Austria  and  England.  As  according  to  the 
provisions  of  the  treaty,  the  woollen  and  cotton  of  English  manufacture  may,  instead  of  paying  by  weight,  pay  15  per 
cent,  ad  valorem ,  which,  no  doubt,  is  a  signal  advantage  for  the  cheap  goods,  of  which  the  chief  import  in  woollens 
'  and  cottons  from  England  consists.  According  to  the  calculations  of  the  petitioners,  15  per  cent,  ad  valorem  is  tan¬ 
tamount  to  reducing  the  duty,  which  they  think  in  itself  low,  to  about  one-half.  As  it  is,  they  complain  that  English 
goods  are  inundating  the  country,  and  if  the  treaty  takes  effect,  the  native  manufacturers  in  those  articles  will  be 
ruined.” — Correspondence  London  Times ,  November  1868. 

And  yet  the  wages  of  Austria  in  the  woollen  manufacture  are  probably  full  85  per  cent,  less  than  the  corresponding 
,  wages  in  Great  Britain. — Commissioner. 

t  Report  of  Alexander  Redgrave,  Esq.,  Inspector  of  British  Factories,  to  her  Majesty’s  principal  Secretary  of  State 
for  the  Home  Department,  London,  1867. 

$  From  what  appears  to  be  entirely  reliable  evidence  submitted  in  the  report  of  the  inspectors  of  British  factories, 
above  referred  to,  we  present  some  further  details  of  interest  derived  from  a  comparison  of  results  of  labor  in  Russian 
and  British  cotton  factories,  respectively.  The  estimate  of  relative  production  shows  “  that  the  same  machinery  in 
England  would  produce  half  as  much  again  either  yarn  or  cloth  as  in  Russia.”  “  Mules  in  Russia  seldom  make  above 
two  and  a  half  draws  per  minute  when  spinning  82s  twist,  while  in  England  they  do  not  run  at  less  ihan  three  and  a 
half.”  “  In  Russia,  looms  on  32s  run  at  the  rate  of  145  picks  per  minute;  in  England,  220  is  not  considered  too  fast. 
No  weaver  in  Russia  ever  minds  more  than  two  looms ;  in  England  it  is  not  unusual  for  hands  to  keep  four  looms  run¬ 
ning  without  any  assistance.” 


48 


comparison  of  the  working  of  a  cotton  factory 
located  at  Oldenburgh,  in  Germany,  with  the  av¬ 
erage  results  attained  in  Great  Britain,  which 
shows  “  that  the  German  machinery,  superintend 
ed  by  British  overlookers,  turned  off  weekly  the 
same  weight  of  work  with  hours  of  labor  extend¬ 
ing  every  day  from  5  30  a.  m.  to  8  p.  rn.t  (inclu¬ 
ding  Saturdays,)  as  would  be  turned  off  in  an  av¬ 
erage  British  factory  during  a  like  period,  with 
the  hours  of  labor  extending  from  6  a,  m.  to  6 
p  m.,  and  not  including  the  whole  of  Saturday  ; 
and  further,  that  if  German  in  place  of  English 
overlookers,  were  employed,  the  product  would 
not  be  nearly  so  much.”  To  show,  furthermore, 
that  these  differences  in  the  results  of  British  and 
ether  European  production  are  not  confined  to 
the  department  of  textile  manufactures,  we  sub¬ 
mit  the  following  data  in  respect  to  the  manufac¬ 
ture  of  iron.  Taking  puddling  as  the  represen¬ 
tative  process  of  this  department  of  industry, 
we  find  the  average  daily  wages  paid  in  Staf¬ 
fordshire,  England,  in  France  and  in  Belgium,  to 
be  as  follows  : 

England . 7s.  Gd.  to7s.  10<?.  per  day. 

France,  (Sireuil) .  6s.  Ad.  per  day. 

Belgium . .  4s.  2c?.  to  5s.  0c?.  per  day. 

Now,  with  these  differences  in  favor  of  produc¬ 
tion  in  France  and  Belgium,  as  compared  with 
England,  the  average  price  of  merchant  bar-iron, 
the  product  of  the  respective  industries  at  the 
works,  is  returned  on  the  best  authority  to  be  as 
follows  : 

In  England .  £6  10s.  per  ton. 

In  Belgium .  7  Os.  per  ton. 

In  France .  8  Os.  per  ton. 

But  it  may  be  said  “  these  facts  are  all  very 
curious  and  very  interesting,  but  what  have 
they  to  do  with  the  question  at  issue?”  Just 
this  :  they  show  first  that  the  mere  differences  in 
the  nominal  wages  paid  in  the  great  leading 
branches  of  industry  in  the  United  States,  as 
compared  with  Europe,  constitute  in  themselves 
no  fair  standard  for  determining  the  degree  ol 
protection  to  which  American  manufacturers 
may  be  entitled,  unless  it  is  conceded  in  the  out¬ 
set  that  the  results  of  American  industry  are  in 
no  way  superior  to  the  results  of  the  least  pro¬ 
ductive,  which,  as  above  shown,  is  also  the  poor¬ 
est  paid  labor  in  Europe.  They  also  show,  sec¬ 
ondly,  that,  in  many  respects,  it  is  not  with  the 
pauper  labor,  but  with  the  best  paid  and  highest 
skilled  labor  of  Europe  that  the  United  States 
comes  most  in  competition,  and  therefore  has  the 
most  reason  to  apprehend  and  consider.  And, 
final)),  the  above  facts  make  it  clear  that  theie 
is  a  method  by  which  a  more  stable  protection 
can  he  made  available  to  the  industry  of  nations 
other  than  through  the  medium  of  the  continued 
imposition  and  piling  up  of  duties  under  a  tariff; 
a  point  which  we  believe  is  the  most  important 
that  can  to-day  occupy  the  attention  of  all  inter¬ 
ested  in  the  future  of  American  industry,  inas¬ 
much  as  upon  its  proper  consideration  and  recog¬ 
nition  depend  the  settlement  of  the  question 
whether  production  in  the  United  States  shall 
continue  as  now,  to  be  dependnet  upon  the  arti¬ 
ficial  support  which  Congress  is  annually  called 
upon  to  administer;  or  whether  the  nation,  in ] 


this  respect,  availing  itself  of  the  greatest  resour¬ 
ces  and  opportunities  ever  granted  under  Provi¬ 
dence  to  any  people,  shall  hereafter  go  forward 
in  the  full  strength  of  its  manhood  to  command 
such  a  share  of  the  commerce  and  the  markets 
of  the  world  as  its  population  and  wealth  would 
rightfully  entitle  it. 

In  touching  this  subject,  we  touch  alike,  in  a 
great  degree,  the  secret  of  the  commercial  and 
industrial  supremacy  of  Great  Britain,  and  the 
deficiency  and  weakness  in  the  same  respects  of 
the  United  States.  As  we  have  already  shown, 
Great  Britain  is  at  a  great  disadvantage  in  point 
of  wages  to  every  other  commercial  and  indus¬ 
trial  nation,  with  the  single  exception  of  the 
United  States.  She  enjoys,  furthermore,  no  pre¬ 
eminence  in  the  natural  supply  of  any  of  the  great 
raw  materials,  except  coal;  while  her  manu¬ 
facturers  know  that  they  have  nothing  to  expect 
from  their  own  government,  except  non-interfer¬ 
ence,  and  a  careful  exemption  from  all  unneces¬ 
sary  burdens  of  taxation,  either  on  raw  material, 
processes,  or  products.  In  the  competition  for 
the  trade  of  the  world,  with  the  advantages  gen¬ 
erally  against  them,  in  respect  to  cheap  food, 
cheap  labor,  and  most  raw  materials,  they  fur¬ 
ther  know  that  the  only  protection  available 
must  be  the  protection  which  results  from  sa¬ 
gacity,  energy,  cheap  capital,  economy,  and  the 
utilization  to  the  greatest  possible  extent  of 
every  natural  opportunity;  and  knowing  this 
they  exercise  these  qualities,  planting  the  fur¬ 
nace  and  the  rolling  mill  in  the  closest  proxim¬ 
ity  to  cheap  ore,  coal,  and  transportation,  and 
not  in  the  locality  where  the  principal  stock¬ 
holder  happens  to  reside;  conducting  manufac¬ 
tures  by  private  rather  than  corporate  enter¬ 
prise;  and  subjecting  the  same  when  once  es¬ 
tablished  to  the  continued  supervision  of  prin¬ 
cipals  rather  than  of  agents.  Production  in 
Great  Britain,  therefore,  based  on  these  and 
other  similar  conditions,  commands  success,  de¬ 
fies  and  crushes  foreign  competition,  and  renders 
the  whole  world  tributary  to  itself. 

Now  on  the  other  hand  we  maintain,  and  are 
prepared  to  establish  our  assertion  with  the 
most  abundant  proof,  that  the  whole  course  of 
recent  legislation  in  the  United  States — national, 
state,  and  local — has  been  to  establish  a  policy 
and  results  exactly  the  reverse  of  that  of  Great 
Britain.  Wliat  has  it  done  ? 

First.  It  has  neutralized  every  benefit  that 
can  flow  from  the  possession  of  cheap  raw  ma¬ 
terial  from  cotton  and  pig-iroi^  down  to  ice. — 
Take  a  single  illustration:  go  on  to  the  conti¬ 
nent  of  Europe  and  ask  any  manufacturer  the 
cause  of  British  supremacy  in  production,  and 
one  reason  always  assigned  will  be  the  posses-: 
sion  of  cheap  and  abundant  fuel ;  and  yet  to-day 
the  price  of  coal  in  the  United  States,  raised  and 
ready  for  delivery  at  the  pit’s  mouth,  will  aver¬ 
age,  in  most  localities  advantageously  situated 
for  industrial  purposes,  less  in  United  States 
currency,  than  the  price  obtainable,  expressed 
in  United  States  gold,  at  the  pit’s  mouth  of 
many  of  the  leading  mines  of  Great  Britain  and 


49 


? 


-t 


\ 


1 


of  Belgium.*  When,  however,  the  coal  reaches 
the  American  consumer  the  case  is  entirely  re¬ 
versed,  the  advantage  as  measured  in  price  ac¬ 
cruing  to  the  foreign  consumer  to  the  extent  of 
very  large  differences. 

Second.  It  has  offered  a  bounty  on  incompe¬ 
tence  and  bad  management,  rather  than  a  stimu¬ 
lus  for  the  exercise  of  increased  skill  and  econo¬ 
my.  During  the  three  years  that  the  Commis¬ 
sioner  has  been  engaged  in  his  official  investiga¬ 
tions  relative  to  the  national  revenues,  he  has 
been  afforded  the  opportunity  of  conferring  with 
the  representatives  of  nearly  all  those  branches 
of  industry  that  have,  from  time  to  time,  come 
to  Washington  for  the  purpose  of  procuring  ad¬ 
ditional  protection  through  an  advance  of  the 
tariff;  and  he  avers,  through  his  own  know¬ 
ledge,  that  in  very  many,  perhaps  a  majority  of 
instances,  when  it  was  represented  that  ruin  or 
curtailment  would  follow  the  failure  to  obtain 
specific  legislation,  other  persons,  in  different 
sections  of  the  country,  were  prosecuting  the 
same  branches  of  industry  with  success,  and 
with  the  realization  of  fair  if  not  large  profits. 
These  latter,  when  consulted,  almost  invariably 
replied,  “We  do  not  desire  any  additional  pro¬ 
tection  unless  a  gradual  advance  of  the  tariff  on 
the  constituents  of  our  products  render  it  neces¬ 
sary  ;  and  what  we  would  most  prefer  would  be 
that  Congress  take  off  the  internal  revenue  taxes, 
give  us  our  raw  materials  as  cheap  as  possible, 
and  then  let  us  alone.” 

We  appeal,  furthermore,  to  the  members  of 
the  thirty-ninth  and  fortieth  Congress,  or  to  any 
one  else,  to  name  the  industries  that  have  been 
ruined  or  materially  crippled  throngh  the  fail¬ 
ure,  as  an  immediate  and  principal  cause,  to  pass 
any  one  of  the  bills  that  have  been  matured  and 
reported  since  the  termination  of  the  war,  grant¬ 
ing  increased  protection.  The  Commissioner, 
on  the  other  hand,  were  he  at  liberty  to  state 
what  has  been  communicated  to  him  confiden¬ 
tially,  could  name  not  a  few  that  have  paid  larger 
dividends  since  the  failure  of  such  bills  than  at 
any  former  period ;  and  many  others  that  have 
not  achieved  a  fair  measure  of  success  through 
the  excessive  enhancement  of  the  price  of  the 
constituents  of  their  products  by  the  existing 
tariff. 

The  members  of  the  Finance  Committees  of 
the  thirty-ninth  Congress  will  remember  full 
well  the  earnest  appeal  made  to  them  in  the 
spring  of  1866,  to  increase  the  duties  on  piece 
silks  from  the  present  high  rate  of  60  per  cent. 
ad  valorem ,  to  70  per  cent. :  and  the  predicted 
destruction  of  the  industry  in  question  in  case 
the  request  should  not  be  granted.  Let  them 
contrast  with  this  recollection  the  following  ad¬ 
vertisement  of  recent  extensive  publicity ; 


American  Silks. — Messrs.  — —  and  — ,  of  Boston 
take  pleasure  in  announcing  that  they  have  contracted- 

with  Messrs. - for  the  entire  production  of  their 

celebrated  mill  in  American  silks.  *  *  *  The  price 
of  the  silks  is  only  —  per  yard  at  retail ;  the  extraordi¬ 
nary  cheapness  of  which  is  accounted  for  by  the  fact 
that  85  per  cent,  of  the  raw  material  of  which  they  arc 
made  comes  into  the  country  absolutely  free  from  im¬ 
post  duties  ;  and  we  confidently  assert  that  at  this  price 
we  are  giving  to  the  public  a  silk  which  could  not  be  im¬ 
ported  from  Lyons  for  a  much  larger  sum. 

The  Commissioner  could  also  name  an  article* 
of  hardware  to  which,  after  hearing  and  earnests, 
solicitation,  increased  protection  was,  in  1866, 
granted  in  committee,  (but  through  the  failure 
of  the  bill  not  eventually  obtained,)  that  sinco 
the  period  referred  to  has,  it  is  claimed,  not  only 
driven  the  competing  article  entirely  out  of  the 
domestie  market,  but  is  also  now  constituting  an 
article  of  export.  To  have  granted  increased 
protection,  in  any  of  these  instances,  would, 
therefore,  have  been  equivalent  to  imposing  an 
unnecessary  tax  upon  the  public,  or  of  supple¬ 
menting,  through  legislation,  that  increase  of 
skill  and  economy  which  the  failure  to  obtain 
additional  protection  subsequently  compelled  the 
manufacturer  to  exercise. 

The  Commissioner  will  submit  but  one  further 
illustration  of  this  subject  from  the  many  that 
have  fallen  under  his  observation : 

In  the  summer  of  1867,  while  studying  the  in¬ 
dustries  of  Europe,  he  visited  a  factory  the  pro¬ 
ducts  of  which  had  for  many  years  found  an  ex¬ 
tensive  market  in  the  United  States.  The  pro¬ 
duct  being  staple,  and  the  industry  one  that  it 
was  exceedingly  desirable  should  be  extended 
in  the  United  States,  the  Commissioner  studied 
the  process  of  manufacture  with  great  care,  from 
the  selection  of  the  raw  material  to  the  packing 
of  the  finished  product ;  the  rates  of  wages  ;  the 
intelligence  of  the  operatives,  and  the  hours  of 
labor.  When  his  investigation  was  completed, 
the  Commissioner  said  to  the  foreign  manufac¬ 
turer — a  man  whose  name  is  a  household  word 
in  his  own  country  fbr  integrity  and  philanthropy 
— “  the  duty  on  the  import  of  these  articles  into 
the  United  States  is,  respectively,  36  per  cent 
ad  valorem,  and  30  per  cent,  ad  valorem,  and  20 
cents  per  pound;  if  you  have  given  me  your 
prices,  products  of  machinery,  and  cost  of  labor 
correctly,  I  do  not  Well  see  how  you  could  ex¬ 
port  your  fabrics  to  the  United  States,  even  if 
there  was  substantially  no  duty,  as  the  advan¬ 
tage  of  raw  material  is  mainly  upon  our  side.” 
“Iam  sometimes  at  a  loss  myself  to  account  for 
the  course  of  trade,”  was  the  reply ;  “  but  per¬ 
haps  it  will  help  you  to  a  conclusion  if  I  tell  you 
that  some  time  ago,  finding  ourselves  pressed 
with  German  competition,  we  threw  out  our  old 
machinery  and  replaced  it  with  a  new  and  im¬ 
proved  pattern ;  and  the  machinery  by  us  re- 


*  The  following  are  the  prices  of  coa  at  the  pit's  mouth,  returned  to  the  Commissioner  from  various  localities  in  the 
United  States  and  Europe,  for  the  year  1867  s 

United  States.— Eastern  slope  of  the  Alleghanies,  anthracite  $t  60  to  $1  75,  currency,  per  ton  (Including  royalty); 
bituminous  and  semi-bituminous,  1S65,  $1 ;  1867,  $1 1>0.  Western  slope,  Westmoreland,  |l  50;  Pittsburg  banks,  $1  68; 
Brazil,  Indiana,  $1  25;  La  Salle,  Illinois,  $2.  Previous  to  the  war,  coal  at  the  pit’s  mouth  in  the  United  States  was 
much  cheaper.  In  1S58  the  Philadelphia  and  Heading  Railroad  Company  mined  and  delivered  anthracite  coal  on  cars, 
per  contract,  for  87)£  cents  p?r  ton  ;  while  the  details  of  the  workings  of  one  of  the  best  conducted  iron  furnaces  in 
the  middle  States  for  the  year  I860— *61,  exhibited  to  the  Commissioner,  show  the  average  cost  of  the  best  coal  at  the 
furnace  mouth  to  have  been  but  little  in  excess  of  60  cents  per  ton. 

Eukopk. — Newcastle,  best,  $1  75  to  $2,  gold,  per  ton;  Wigan,  $2  12% ;  near  Liverpool,  $1  02%;  Gartsherle,  Scot* 
land  ,*1  &1% ;  Belgium,  Mons,  $2  07 ;  Charleroi,  $1  94;  Westphalia,  $1  50. 


50 


j^cted  was  sold  to  go  to  the  United  States.”  To 
complete  the  story,  it  is  only  necessary  for  the 
Commissioner  to  add  that  the  owners  of  this 
second-hand  machinery  have  since  its  importa¬ 
tion  demanded  and  received  an  increased  pro¬ 
tection  on  its  products. 

Third.  In  further  enumeration  of  the  effects 
of  the  national  policy  under  consideration,  we 
assert  that  it  has  largely  contributed  to  the  de¬ 
struction  of  our  foreign  commerce  by  rendering 
an  exchange  in  kind,  for  most  articles  of  domes¬ 
tic  production,  an  absolute  impossibility.  The 
proofs  already  submitted  under  this  head  are 
believed  to  be  conclusive. 

Fourth.  It  has  contributed  to  repel  the  immi¬ 
gration  into  the  country  of  skilled  labor,  and 
has  not  improved  the  condition  of  the  working 
man  at  home.  Thus,  instances  are  not  infre¬ 
quent  where  skilled  workmen  from  Europe  have 
visited  the  United  States  within  the  last  three 
years  with  the  view  of  engaging  permanently  in 
their  special  industries,  and  have  returned  with 
the  feeling  that  the  inducements  offered  were 
not  sufficient  to  render  a  change  of  residence  on 
their  part  desirable  ;  and  the  Commissioner  is 
assured  by  manufacturers  that,  at  the  present 
time  especially,  the  tendency  among  skilled 
workmen,  brought  from  Europe  in  pursuance  of 
special  arrangements  for  the  extension  of  special 
branches  of  industry,  is  rather  to  return  to  the 
Old  World  than  remain  in  the  United  States. 
The  explanation  of  this  is,  that  although  the 
wages  paid  at  present  in  the  United  States  for 
skilled  labor  are  nominally  much  greater  than  in 
Europe,  their  purchasing  power,  as  respects 
commodities  and  rents,  are  so  much  less  as  to 
leave  either  no  balance  whatever  in  favor  of  the 
industry  of  the  United  States  or  one  that  is  com¬ 
paratively  trifling.  We  will  produce  a  few  facts 
in  proof  and  illustration : 

In  a  leading  establishment  in  central  New 
York,  manufacturing  an  article  of  hardware  in 
competition  with  Sheffield  products,  the  present 
advance  in  wages  for  skilled  workmen,  as  re¬ 
turned  to  the  Commissioner,  calculated  on  a  gold 
basis,  is  about  11  per  cent,  on  the  established 
Sheffield  prices — an  advance  not  sufficient  to 
compensate  for  the  difference  in  favor  of  the 
foreign  workman,  in  respect  to  rents,  to  clothing, 
and  some  other  commodities.  In  an  establish¬ 
ment  in  the  vicinity  of  New  York  city,  manu¬ 
facturing  the  same  products,  the  difference  in 
still  even  less. 

By  reference  to  tables  of  prices  of  commodi¬ 
ties,  of  rents,  dec.,  die.,  in  the  United  States, 
it  will  be  seen  that  the  average  rent  of  six- 


roomed  tenements  in  the  United  States  is  $84* 
gold,  per  annum;  and  for  four-roomed  tene¬ 
ments,  $63.  Compare,  now,  these  rents  with 
those  of  tenements  in  the  manufacturing  dis¬ 
tricts  of  Great  Britain.  In  the  cotton  districts, 
according  to  official  returns,  the  average  rentals 
of  the  houses  occupied  by  operatives  are  £8  16s., 
or  $43  per  annum;  while  in  Sheffield  66  per 
cent,  of  the  houses  rented  by  operatives  are  un¬ 
der  £1  ($35)  per  annum,  and  only  26  per  cent, 
command  a  rental  of  £10  ($50)  and  upwards. 

At  the  celebrated  iron- works  of  Le  Creusot, 
France,  a  small,  ordinary,  but  comfortable  house, 
with  a  garden,  rents  for  $16  per  annum;  but 
this  latter  price  is  believed  to  be  exceptional. 

The  Commissioner  believes  that  the  mischief 
wrought  to  the  laboring  classes  in  the  eastern 
sections  of  the  United  States  during  the  last  two 
years,  by  the  high  prices  of  food,  which  have  in 
part  resulted  from  the  repeal  of  the  reciprocity 
treaty,  has  far  more  than  counterbalanced  any 
advantages  which  have  otherwise  accrued  to  the 
country  through  this  specific  legislation ;  for  al¬ 
though  the  quantity  of  food  supply  which  is  ca¬ 
pable  of  being  imported  from  the  British  prov¬ 
inces  is,  as  compared  with  the  national  aggre¬ 
gate  most  trifling,  yet  it  has  been  sufficient  du¬ 
ring  the  period  referred  to  to  constitute  the  dif¬ 
ference  between  “enough”  and  a  deficiency;  and 
such  deficiency  or  tendency  thereto,  combined 
with  the  uncertainties  of  an  irredeemable  paper 
currency,  has  placed  the  consumer  almost  en¬ 
tirely  at  the  mercy  of  the  speculator.* 

That  the  existing  policy  brings  prosperity  to 
certain  branches  of  domestic  production  cannot 
be  questioned ;  but  like  the  vigor  of  the  tropical 
parasite,  which  eventually  paralyzes  the  tree  on 
which  it  leans  for  support,  such  special  pros¬ 
perity  is  most  antagonistic  to  the  normal  and 
healthy  growth  of  the  State.  Thus,  under  the 
influence  of  an  almost  prohibitory  tariff,  the 
business  of  manufacturing  pig  iron  enjoys  a  high 
degree  of  prosperity,  and  furnaces  continue  to 
be  multiplied ;  but  if  the  community  at  large 
has  been  compelled  to  pay  an  unnecessary  profit 
of  from  $7  to  $10  per  ton  on  a  present  annual 
product  of  1,500,000  tons,  and  has  therefore 
been  subjected  during  the  past  year  to  a  tax 
of  from  $10,000,000  to  $15,000,000,  the  pros¬ 
perity  of  the  pig  iron  manufacture  in  question 
has  cost  the  country  a  great  deal  more  than 
it  is  worth ;  and  further,  it  is  only  necessary  that 
a  few  more  such  waves  of  commercial  prosperity 
should  sweep  over  the  land  in  order  to  necessi¬ 
tate  the  enactment  of  an  average  tariff  of  100  per 
cent,  ad  valorem  in  order  to  enable  the  great 


*  A  striking  illustration  of  the  disproportionate  ratio  in  which  a  deficiency  in  the  ordinary  supply  of  an  essentia  1 
commodity  increases  prices  is  afforded  by  the  experience  of  Great  Britain  in  reference  to  her  supply  of  wheat  for  the 
years  1863  and  1867.  The  present  average  yearly  consumption  of  wheat  in  Great  Britain  is  about  20,800,000  quarters. 
The  domestio  product  being  insufficient  to  meet  the  requirements  for  domestic  consumption,  the  purchase  of  an  addi¬ 
tional  supply  from  foreign  countries  is  every  year  a  matter  of  necessity,  which  purchase  varies  in  amount  in  accordance 
with  the  abundance  or  deficiency  of  the  home  crop.  In  1863,  the  home  crop  being  good,  the  requirement  from  foreign 
countries  was  4,500,000  quarters,  while  the  total  cost  of  the  wheat  consumption  of  Great  Britain  for  that  year  was 
£40,000,000  ($200,000,000) ;  of  which  £6,100,000  ($80,500,000)  was  paid  for  foreign  purchases.  In  1S67,  on  the  other 
hand,  the  home  crop  was  deficient  and  necessitated  a  supply  from  foreign  countries  of  11,100,000  quarters,  as  compared 
with  4,500,000  in  1863 ;  which  deficiency,  and  the  necessity  for  purchasing  6,600,000  additional  quarters  from  abroad, 
carried  up  the  cost  of  the  total  home  consumption  from  £40,000,000  ($200,000,000)  in  1863  to  £70,000,000  ($850,000,000) 
In  1867 ;  and  that,  too,  notwithstanding  the  total  home  consumption,  by  reason  of  enforced  economy,  was  undoubtedly 
considerably  diminished,  or  supplemented  by  the  consumption  of  other  and  cheaper  articles  of  food.  To  obtain  the 
additional  supply  needed  in  1867  there  was  furthermore  paid  to  foreign  countries  the  sum  of  £33,500, 000,  ($107,500,000) 
as  compared  with  £6,100,000  ($80,500,000)  paid  for  the  necessary  foreign  supplies  In  1868. 


mass  of  less  favored  producers  to  effect  the  sale 
of  any  product  even  in  their  own  markets.*  And 
furthermore,  that  such  prosperity  as  is  continu¬ 
ally  pointed  out  to  prove  the  beneficial  effects  of 
the  existing  tariff  does  tend  to  produce  such  a  re¬ 
sult,  is  proved  by  the  fact  that  although  the  tariff 
has  been  constantly  and  largely  advanced  since 
1861,  and  although  the  internal  revenue  taxes, 
which  neutralized  in  part  its  protective  influ¬ 
ence,  have  been  substantially  removed  during 
the  last  year,  the  demand  for  still  further  ad¬ 
vances  is  at  present  as  urgent  as  at  any  time 
previous.  As  offering  some  explanation  of  this 
circumstance,  we  commend  to  the  careful  con¬ 
sideration  of  all  interested  the  following  signifi¬ 
cant  answer  given  under  oath  to  a  question  pro¬ 
pounded  by  the  Commissioner  to  the  largest  and 
most  successful  manufacturer  in  a  special  de¬ 
partment  of  the  iron  and  steel  industry  of  the 
Ufrited  States : 

Question.  What,  according  to  your  experience,  wa8 
the  effect  of  the  increase  of  the  tariff  in  1864  on  the  in 
dustries  with  which  you  are  specially  connected  ?  An* 
swer.  The  first  effect  was  to  stimulate  nearly  every 
branch— to  give  an  impulse  and  activity  to  business  ; 
but  in  a  few  months  the  increased  cost  of  production, 
and  the  advance  in  the  price  of  labor,  and  the  products 
of  labor,  were  greater  than  the  increase  of  the  tariff,  so 
that  the  business  of  production  was  no  better,  even  if  in 
so  good  a  condition,  as  it  was  previous  to  the  advance  of 
the  tariff  referred  to.  That  was  the  effect  on  most  arti¬ 
cles  with  the  manufacture  of  which  I  am  practically  ac¬ 
quainted. 

Now,  what  the  country  needs  is  a  tariff  look¬ 
ing  first  to  the  attainment  of  public  revenue,  and 
not  primarily  to  the  furtherance  of  mere  private 
interests.  Government  can  add  nothing  to  the 
capital  of  the  country  by  legislation.  It  can 
only  prescribe  the  channels  into  which  capital 
already  ereated  shall  flow. 

It  is  time,  furthermore,  that  the  United  States 
should  have  a  broader  and  more  liberal  policy- 
in  respect  to  its  industrial  development,  than  is 
at  present  made  the  basis  of  legislation:  and 
that  this  policy  should  not  be,  as  it  were,  self¬ 
defensive,  and  looking  merely  at  the  retention 
of  our  own  markets,  but  aggressive. 

THE  POSSIBLE  FUTURE  OF  AMERICAN  INDUSTRY. 

The  Commissioner  prefers  no  claim  to  the 
possession  of  any  extraordinary  insight  into  the 
future,  but  he  believes  it  is  possible  to  look  for¬ 
ward  to  the  attainment  of  results,  in  respect  to 
a  development  of  national  industries,  which 
shall  find  no  parallel  in  the  history  of  our  for¬ 
mer  experience.  Now,  is  this  mere  fanciful 
writing,  or  has  it  a  basis  of  substantial  reality  ? 

Let  us  see.  By  the  recently  published  mine¬ 
ral  statistics  of  Great  Britain,  it  appears  that 
the  mean  market  price  of  pig  iron  for  the  year 
1867-68,  taking  Welsh  pig  as  the  standard, 
was  £4  3s.  9 d.  ($20.38).  But,  as  has  been 
already  stated,  the  present  average  cost  of  pro¬ 
ducing  pig  iron  in  the  United  States  under 


favorable  conditions  and  good  management  is 
not  in  excess  of  $26  per  ton  currency ;  and  as 
respects  some  of  the  furnaces  of  Pennsylvania 
and  Maryland,  the  Commissioner  is  assured 
that  the  present  cost  of  production  is  little  in 
excess  of  $23,  which  price,  reduced  to  gold  at 
36  per  cent,  premium,  $16.91,  is  $3.47  per  ton 
less  than  the  market  price  of  the  cheapest  and 
standard  supply  of  this  article  in  the  markets  of 
Europe.  It  is  evident,  therefore,  that  it  is  pos¬ 
sible  for  the  United  States,  at  the  present  time 
at  least,  to  compete  on  terms  of  equal  advan¬ 
tage  in  the  markets  of  the  world  for  the 
partial  supply  of  an  article  that  is  even  more 
essential  to  civilization  than  cotton  ;  and  this 
advantage  which  has  accrued  to  the  country 
under  the  most  unfavorable  circumstances,  is 
capable  of  being  rendered  still  greater  and  more 
pre-eminent,  by  the  attainment  through  legisla¬ 
tion  of  results  which,  by  increasing  the  pur¬ 
chasing  power  of  wages,  shall  render  labor  less 
costly  and  more  available,  and  thus  decrease 
the  present  cost  of  production  and  transporta¬ 
tion.  And  if  the  representatives  of  the  indus¬ 
trial  interests  of  Pennsylvania  and  Maryland, 
instead  of  interesting  themselves  to  prevent  a 
natural  distribution  of  cheap  coal,  would  devote 
themselves  to  the  full  solution  of  the  problem 
referred  to,  ten  furnaces  would  speedily  spring 
up  within  their  territories  where  one  now  ex¬ 
ists,  and  the  eommerce  of  the  world  would  be¬ 
come  tributary  to  their  products. 

Again,  let  us  consider  the  condition  of  the 
manufacture  of  cotton.  It  is  well  known  that 
before  the  war  American  coarse  cottons  were 
obtaining  a  preference  over  all  others,  in  the 
markets  of  the  east  and  of  South  America,  and 
that  their  export  was  rapidly  increasing,  The 
war  interrupted,  and  in  a  great  degree  destroyed 
this  business  ;  but  the  Commissioner,  after  a 
careful  examination  and  comparison  of  all  the 
elements  of  the  cost  of  producing  coarse  cottons 
(No.  25  and  under)  in  the  United  States  and 
'  Europe,  in  which  examination  he  has  had  the 
assistance  of  experts  in  both  countr*es,  has  come 
to  the  conclusion  that  if  the  Amerii  an  manufac¬ 
turer  could  be  put  upon  the  same  basis  as  his 
foreign  competitor  as  regards  direct  and  indirect 
taxation,  cost  and  excellence  of  machinery,  and 
would  bring  to  his  business  the  same  skill  and 
economy,  he  would  be  enabled  to  produce  cotton 
goods  and  yarns,  of  the  number  specified,  at  a 
cost  which  would  enable  him  to  undersell  all 
other  similar  producers.  The  attainment .  of 
such  a  result,  which  involves  nothing  that  is  im¬ 
practicable,  nothing  that  is  visionary,  "would 
determine  the  exportation  of  no  small  part  of 
the  cotton  grown  in  the  United  States  in  a 
manufactured,  rather  than  in  an  unmanufactured 
condition ;  would  erect  two  cotton  mills  where 
one  now  exists ;  would  largely  increase  the  de- 


*  It  should  be  especially  noted  that  this  enhanced  price  of  iron  enters  into  the  cost  of  every  article  made  of  lion  or 
steel ;  that  is  to  say,  it  increases  the  cost  of  every  tool  and  implement  of  production  and  transportation.  Upon  this 
enhanced  cost  must  be  predicated  the  necessity  ol  greater  capital  in  other  manufactures  of  iron,  more  loss  of  interest, 
decreased  consumption  and  increased  risk.  No  tax  can  be  more  vicious  than  one  imposed  upon  tools,  implements  and 
machinery — upon  the  processes  rather  than  the  results  of  labor.  The  enhanced  cost  of  iron  beams,  c  dlings,  cornices 
and  stairways  for  fire-proof  buildings,  may  also  be  mentioned  &b  one  of  the  unfavorable  results  of  a  high  price  of 
pig  iron. 


52 


to  and  for  agricultural  produce  in  the  home 
markets,  and  would  bring  back  four-fold  that 
commerce  of  the  ocean  which  now  wanes  almost 
to  annihilation,  in  great  part  through  want  of 
legitimate  occupation  in  effecting  exchanges. 

And  what  has  been  said  of  the  possible  future 
of  the  coarse  cotton  mauufacture  is  equally  true 
of  the  manufacture  of  medium  table  cutlery, 
common  locks,  axes,  spades,  shovels,  agricultu¬ 
ral  implements  generally,  and  many  other 
articles  of  hardware;  the  advantage  in ithe  pro¬ 
duction  of  which,  growing  out  of  the  application 
of  superior  skill  and  the  greater  use  of  machin¬ 
ery,  is  already  so  far  on  the  side  of  the  United 
States,  that  to  go  from  one  of  our  first  class 
establishments,  manufacturing  many  of  the 
above  articles,  into  similar  ones  in  Great  Bri¬ 
tain,  France,  or  Germany,  is  like  going  from  the 
19th  century  back  to  the  middle  ages.  Now,  if 
we  will  but  give  to  the  American  manufacturers 
in  these  departments,  who  have  already  estab¬ 
lished  their  business  on  a  basis  of  sufficient 
skill  and  capital,  an  opportunity  to  produce 
cheaper,  a  result  clearly  within  the  reach  of 
legislation,  we  shall  also  afford  an  opportunity 
for  the  extension  of  production  which  can  have 
no  limit,  except  the  ability  of  three-quarters  of 
the  population  of  the  globe  to  purchase  and 
consume;  and  the  skilled  labor  of  other  na¬ 
tions  must  either  come  to  the  United  States 
to  pursue  their  special  avocations  or  seek  other 
employments. 

But  a  prospect  of  industrial  development, 
which  far  transcends  all  others  in  importance, 
awaits  the  Pacific  coast  of  our  country,  when 
reason  and  common  sense,  rather  than  prejudice, 
shall  exercise  control  over  its  population  and  the 
enactment  of  its  laws. 

No  one  can  study  the  industrial  elements  of 
Great  Britain  and  of  western  Europe  without 
becoming  impressed  with  the  fact  that  an  ade¬ 
quate  supply  of  intelligent  and  cheap  labor,  to 
meet  the  increasing  demands  of  the  world  for 
manufactured  products,  is  one  of  the  most  diffi¬ 
cult  problems  of  their  future.  Already  in 
France  and  Germany  the  drain  of  labor  from 
the  rural  districts,  to  engage  in  manufacturing 
industry  in  towns,  has  become  a  cause  of  com¬ 
plaint  by  reason  of  the  embarrassment  which  it 
entails  upon  the  planting  and  harvesting  of  the 
crops,  and  the  continuance  of  a  further  supply 
of  labor  from  this  source  can  only  be  effected  by 
the  offer  of  higher  wages.*  Increased  wages, 
iu  turn,  tend  to  increase  the  price  of  agricultural 
products  and  other  like  raw  material ;  and  also 
contribute  directly  to  largly  increase  the  capa¬ 
city  for  the  consumption  of  domestie  manufac¬ 
tured  products,  inasmuch  as  the  cost  of  all 


articles,  which  are  in  a  great  part  the  result  of 
the  application  of  natural  forces  through  ma¬ 
chinery,  does  not  even  increase  in  the  same 
ratio  as  the  wages  of  manual  labor  that  attend 
such  machinery.  Thus,  Saxony,  in  1866,  re¬ 
ported  to  have  produced  six  million  dozen  pairs 
stockings,  and  of  this  product  to  have  exported 
some  two  million  dozen  to  the  United  States, 
equivalent  to  about  three-quarters  of  a  pair  of 
stockings  to  each  man,  woman,  and  child  of  our 
population  per  annum.  But  to  effect  this  result 
Saxony  has  already  drawn  upon  her  rural  popu¬ 
lation  to  an  extent  sufficient  to  produce  a  marked 
diminution  of  labor  available  for  agricultural 
purposes,  so  that  if  she  should  propose  to  double 
her  product  of  stockings  and  supply  the  popula- 
of  the  United  States  with  one  and  a  half  pairs, 
instead  of  three-quarters  of  one  pair  per  head 
per  annum,  she  must  provide  herself  with  such 
an  additional  supply  of  labor  as  will  require  an 
additional  supply  and  probable  importation 
of  food.  But  such  an  additional  supply  of  labor 
can  only  be  obtained  through  such  an  induce¬ 
ment  of  increased  wages  as  will  enable  the  re¬ 
cipients  to  purchase  and  use  more  largely  ma¬ 
chine-made  domestic  products;  or,  in  other 
words,  to  wear  stockings,  or  some  other  equiva¬ 
lent  article  of  clothing,  in  place  of  dispensing 
with  them  as  they  may  at  present.  It  is,  there¬ 
fore,  obvious  that  there  is  a  limit  beyond  which 
,  Saxony  cannot  go  in  supplying  stockings  in  com¬ 
petition  with  other  countries  where  food  is 
cheaper  and  labor  more  abundant.  And  this 
illustration  in  respect  to  Saxony  holds  good  in 
respect  to  all  the  other  manufacturing  countries 
of  W estern  Europe. 

Again,  an  examination  of  the  present  condition 
of  the  production  of  pig-iron  will  show,  that  of 
all  the  countries  of  Europe,  Great  Britain  is  the 
only  one  that  has  any  resources  adequate  for 
meeting  the  future  greatly  increased  demand  of 
the  world  for  this  article,  or,  possibly,  of  even 
supplying  their  own  future  requirements  for  do¬ 
mestic  consumption;  and  in  Great  Britain  the 
prospect  of  future  increase  is  dependent  altogether 
upon  her  ability  to  supply  coal  on  a  scale  of  con¬ 
sumption  that  already  is  in  excess  of  the  rate  of 
100,000,000  tons  per  annum.  How  great  this 
prospective  demand  is  likely  to  prove,  may  be 
inferred  from  a  comparison  of  the  present  average 
per  capita  consumption  of  iron  in  different  coun¬ 
tries,  which  ranges  from  about  189  pounds  in 
Great  Britain  and  Belgium,  to  100  pounds  in  the 
United  States,  and  69  pounds  in  France. 

If  we  turn  now  to  the  Pacific  coast  of  the 
United  States  we  shall  find  the  fundamental  con¬ 
ditions  for  an  unlimited  extension  of  manufactur¬ 
ing  industry  supplied  to  a  greater  and  more  per- 


*  The  demand  for  labor  in  France,  consequent  on  the  impetus  given  to  manufacturing  activity,  has  tended  to  drain 
It  from  the  rural  districts  and  congest  it  1  i  the  great  towns.  The  consequences  have  been  very  seriously  felt  In  the 
-.agricultural  districts,  where  a  dearth  of  labor  has  at  times  e  tailed  great  embarrassment  and  heavy  losses  ou  the 
farmers.  Oa  the  othe~  hand,  large  numbers  of  foreign  workmen,  chiefly  Belgian,  Germaa,  and  English,  are  employed 
jQ  the  manufacturing  tow  is.  In  the  town  of  Mulhouse  alone  there  are  more  than  3,000  Term  m  workmen,  anil  the 
inamher  of  lidgi  ms  employed  at  Roubaix  is  stated  to  be  nearly  15,000.”  (C  >rres  ondence  with  her  Majesty’s  ministers 
abroad,  regarding  industrial  questions.  Mr.  Fane  to  Lord  Stanley— L  indon,  1S67.) 

“luereaset  industrial  activity,  in  Belgium,  has  naturally  produced  a  corresponding  increase  in  wages  as  well  as  In 
ihe  price  of  raw  materials.  Several  establishments  could  yield  a  greater  produce  had  they  but  a  sufficient  amount  of 
fiands  at  their  disposal.  The  demtid  for  w  .rkmen,  particularly  in  the  co.«l  districts,  has  raised  great  pretensions  on 
their  part  a  id  has  led  to  several  strikes,  which,  how  :ver,  have  f  irtunately  lasted  >ut  a  short  thn  j,  owing  to  concessions 
usually  made  by  the  masters.”  (Ibid.  Lord  Howard  de  Walden  to  Lord  Stanley,  Brussels,  1667.) 


53 


feet  extent  than  in  any  other  country,  viz :  an 
unlimited  supply  of  cheap  and  fertile  land,  thereby 
entailing  a  supply  of  cheap  food ;  great  natural 
resources  in  respect  to  valuable  minerals,  lumber, 
and  the  product  of  the  seas;  and  finally,  but 
above  all  in  importance,  a  practically  unlimited 
supply  of  cheap,  docile,  and  sufficiently  intelligent 
Chinese  labor.  Under  these  circumstances  there 
is,  really,  nothing  wanting  but  capital,  which 
will  speedily  flow,  in  accordance  with  a  demand 
that  can  offer  both  security  and  profit,  to  rapidly 
develop  an  industry  which,  favored  with  the 
means  of  rapid  and  cheap  intercommunication, 
shall  be  able  to  supply  to  the  markets  of  the  east 
4  all  that  its  immense  population  shall  need  of  the 
products  of  a  higher  civilization.  And  the  pro¬ 
position  is  as  true  now  a3  in  the  great  days  of 
Alexandria,  Venice,  Constantinople,  and  Genoa, 
a  that  the  people  and  the  country  which  controls 
'  the  trade  of  the  east,  controls  in  great  part  the 
wealth  and  the  dominion  of  the  world. 

At  present,  however  the  people  of  the  Pacific 
repel  rather  than  attract  the  labor  which  can 
alone  make  their  natural  resources  and  wealth 
available,  and  fail  to  afford  it  adequate  protection 
either  as  respects  life  or  the  possession  of  prop¬ 
erty.  How  suggestive  a  commentary  on  the  ex¬ 
isting  state  of  things  is  embodied  in  the  following 
statement  recently  made  to  the  Commissioner  by 
the  president  of  one  of  the  largest  mining  proper¬ 
ties  on  the  Pacific  coast:  “  The  hostility  of  our 
miners ,  which  is  sustained  by  •public  opinion,  will 
not  allow  us  to  avail  ourselves  of  cheap  Chinese  la¬ 
bor.  Could  we  do  so,  the  profits  on  our  business 
would  be  increased  from  ten  thousand  to  fifteen 
thousand  dollars  per  month” 

CONCLUSION. 

In  what  has  thus  been  submitted  the  Commis¬ 
sioner  believes  that  he  has  sufficiently  indicated 
his  views  in  respect  to  the  tariff.  He  cannot  re¬ 
sist  the  conclusion  that,  as  it  now  stands,  it  is  in 
many  respects  injurious  and  destructive,  and 
does  not  afford  to  American  industry  that  stim¬ 
ulus  and  protection  which  is  claimed  as  its  chief 
merit.  He  believes  that  to  grant,  in  the  main, 
the  advances  asked  in  the  bills  now  pending 
before  Congress  would  be  but  to  aggravate  the 
very  difficulties  under  which  the  country  now 
labors  to  impair  the  revenues  and  hinder  the 
return  to  specie  payments. 

In  fact,  our  present  tariff  is  in  many  particulars 
apparently  based  upon  the  old  fallacy  that,  in 
the  exchange  of  commodities  between  nations, 
which  constitutes  commerce,  what  one  gains  the 
other  loses.  It  needs  but  a  moment’s  thought  to 
§ e  convinced  that  there  can  be  no  permanent 
trade  or  commerce  unless  it  is  for  the  gain  of  both 
nations:  all  trade  is  based  upon  the  mutuality  of 
services,  and  it  is  one  of  the  evidences  of  the 
Ijpogress  of  modern  thought,  that  the  inter-depen¬ 


dence  of  nations  is  beginning  to  be  recognized. 
This  is  eminently  true  in  England,  France  and 
Germany,  true  in  China  and  Japan,  true  even  in 
Spain,  but  not  yet  recognized  in  the  United 
States,  if  our  laws  are  to  be  taken  as  the  evidence 
of  our  thought. 

With  these  feelings  and  convictions  he  would 
therefore  prove  untrue  to  his  trust  did  he  not 
here  enter  his  most  earnest  protest  against  any 
further  general  increase  of  the  tariff,  but  would, 
on  the  contrary,  recommend — 

First.  An  enlargement  of  the  free  list. 

Second.  A  reduction  of  some  rates  of  duty, 
and,  as  an  exception,  an  increase  of  a  few  others, 
with  a  view  to  the  increase  of  the  revenue. 

Third.  A  reduction  of  some  rates  of  duty  with 
a  view  to  an  absolute  abatement,  on  the  simple 
ground  that  the  reduction  of  a  duty  is  the  reduc¬ 
tion  of  a  tax,  and  that  the  most  efficient  method 
of  protecting  home  industry  is  by  the  removal 
of  obstacles  in  the  form  of  taxes. 

Fourth.  Tim  conversion  to  the  utmost  possi¬ 
ble  extent  of  the  present  ad  valorem  duties  into 
specifics,  as  the  only  practicable  method  of 
insuring  certainty  and  equality  in  the  assess¬ 
ment  of  duties  and  the  prevention  of  undervalua¬ 
tions  and  the  abrogation  of  the  privilege  which 
enables  returning  tourists  to  import  free  of  duty 
an  amount  of  goods  corresponding  to  their  real 
or  supposed  social  position. 

In  behalf  of  the  conclusions  thus  expressed 
the  Commissioner  confidently  appeals  to  the 
true  friends  of  American  industry  for  counte¬ 
nance  and  support ;  for  nothing  can  be  more  cer¬ 
tain  than  that  if  unnecessary  and  iniquitous 
burdens  of  taxation  under  the  tariff  continue  to 
be  laid  upon  the  people,  the  day  is  not  far  dis¬ 
tant  when  a  reaction  of  public  sentiment  will 
compel  either  a  sweeping  reduction  of  duties,  or 
induce  through  agitation  such  an  instability  in 
legislation  as  will  in  itself  prove  most  injurious 
and  destructive. 

The  Commissioner  does  not  believe  it  expedi¬ 
ent  in  this,  a  general  report,  to  enter  upon  the 
specific  details  of  a  tariff  revision,  but  the  pre¬ 
cise  changes  required  in  his  judgment  will,  if 
called  for,  be  presented  in  the  form  of  an  addi¬ 
tional  report,  or  be  submitted  personally  to  the 
finance  committee  of  Congress.  As  a  bill  pro¬ 
posing  a  change  in  the  existing  warehouse  sys¬ 
tem  is,  however,  now  pending  before  Congress, 
some  recommendations  in  respect  to  this  topic 
are  herewith  appended  in  the  form  of  a  supple¬ 
ment. 

I  have  the  honor  to  be  yours,  very  respect¬ 
fully, 

DAVID  A.  WELLS, 

Special  Commissioner  of  the  Revenue. 

Hon.  Hugh  McCulloch, 

Secretary  of  the  Treasury. 


3  0112  061585722 

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